KUALA LUMPUR (Jan 6): Sentoria Group Bhd's 75%-owned subsidiary will co-develop residential and commercial properties with a private property investment company on 120 acres of land in Kuala Muda, Kedah, which marks the property developer and resort operator's first venture in the north.
The project has an estimated gross development value (GDV) of RM180 million, Sentoria said in a Bursa Malaysia filing today.
Sentoria said its subsidiary Sentoria Utara Sdn Bhd (SUSB) today signed a joint venture (JV) agreement with land owner Sejati Pertiwi Sdn Bhd to undertake the development of the freehold land in Bandar Amanjaya, Daerah Kuala Muda, into a mixed development of residential and commercial properties.
"The JV is a strategic alliance for Sentoria to participate potentially in affordable housing development in (the) northern part of Peninsular Malaysia. The JV is expected to contribute positively to the future earnings and thereby improve shareholders' value over the medium to long term," Sentoria said of its rationale for signing this agreement.
It shall take 36 months for SUSB and Sejati Pertiwi to complete the development from the starting date of each phase of the project, it added, and that Sejati Pertiwi would be entitled to 12.5% of the project's GDV.
The 120-acre land is actually one of two land parcels totalling 300 acres that SUSB bought from Ideal Appraisal Sdn Bhd nearly a year ago. Sejati Pertiwi held the 120-acre tract as a nominee for SUSB after the land sale, while the ownership of the remaining 185 acres of land is still in SUSB's hands.
It added that its JV was not expected "to have any immediate material effect" on its gearing, which stood at 0.37 times after deducting the cash in hand as at Sept 30, 2015.
"The financial effect on the future gearing of Sentoria group will depend on the funding mix and level of borrowings required to be secured to fund the project. The board (of Sentoria) shall use its best endeavours to optimise the funding mix and commence construction of the project to maximise the cash flows and minimise the gearing of Sentoria group," it elaborated.
Sentoria's total borrowings stood at RM152.01 million and its cash was at RM13.34 million. Sentoria's total equity was RM376.27 million.
Its counter today inched up by one sen or 1.14% to close at 89 sen, valuing Sentoria at RM426 million.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)