MRCB buys 60 pct more of Lot 348

KUCHING: Malaysian Resources Corporation Bhd (MRCB) announced on Bursa Malaysia recently that it had entered into a share sale agreement (SSA) to acquire the remaining 60 per cent stake held by Gapurna Sdn Bhd in GSB Sentral Sdn Bhd (GSSB) for a total purchase consideration of RM105 million.

  STRONG TRACK RECORD: File photo showing KL Sentral. Although no further details on the proposed development have been disclosed, OSK Research believe MRCB’s past track record in developing KL Sentral under the same mechanism will further enhance its chances to be actively involved with the proposed development of federal land.

OSK Research Sdn Bhd (OSK Research) in its research report yesterday noted that GSSB, principally engaged in property development, is the legal owner of a piece of land in KL Sentral known as Lot 348. The purchase would be funded through internally-generated funds and bank borrowings.

Upon completion of the proposed acquisition, GSSB would then become a wholly-owned subsidiary of MRCB.

Lot 348 was approximately 91,040 square feet (sq ft) and had been approved for a mixed development comprising office and service apartments with a total gross floor area of 1,468,277 sq ft and an estimated gross development value of RM850 million. Development works on this plot commenced in March 2009 and was expected to be completed by the end of 2012.

The research firm was of the view that the consideration price of RM105 million for the remaining stakes in GSSB was fair, given that the land itself was valued at RM110 million based on the current market price coupled with the fact that the on-going development at Lot 348 has reached more than 10 per cent completion.

GSSB secured Shell last year as the anchor tenant for the office space while the serviced apartment would be managed by an external hospitality management firm.

The research house believed that MRCB intended to keep the development in Lot 348 as its investment property, with future plans for the assets to be injected into a real estate investment trust (REIT). It remained positive on this move as it would provide the group with stable future income.

With the Employees Provident Fund (EPF) as its largest shareholder with a more than 40 per cent stake, the research firm understood there to be a high possibility that MRCB would be turned to EPF’s property arm to undertake the development of federal land, particularly for the development of the land in Sungai Buloh.

Although no further details on the proposed development had been disclosed, MRCB’s track record in developing KL Sentral under the same mechanism served to further enhance its chances to be actively involved with the proposed development of federal land.

In addition, with the development on Lot 348 expected to be completed by the fourth quarter of 2012, OSK Research maintained its financial year 2010 and FY11 forecasts as it only expected the investment income from this development to only materialise by 2013.

With that in mind, OSK Research pegged MRCB with a target price of RM1.80 per share from RM1.75 per share previously.


- by Borneo Post