PETALING JAYA: Lim Seong Hai Capital Bhd (LSH Capital) has announced a series of corporate proposals, including acquisitions worth RM157.6 million to expand into property development, and to strengthen its fast-growing construction business.
Upon completion of the proposals, the group will have an enlarged secured construction order book amounting to RM1.1 billion with an overall outstanding order book of RM782 million and carry a property development project with gross development value (GDV) of RM1.59 billion which is expected to provide earnings visibility until 2026.
In addition, the group is involved in construction and property development projects amounting to RM2.7 billion via the BEST Framework collaboration. This collaboration will enable the group to earn certain portion in fees for various value creation efforts.
The corporate proposals entail with a combined acquisition value of RM157.6 million via the execution of share sale agreement to acquire 100% in Astana Setia Sdn Bhd for RM95 million, assets exchange agreement and debt settlement cum share subscription agreement with LSH Ventures Sdn Bhd for RM62 million to be full satisfied via issuance of new LSH Capital shares at 45 sen, which presents a premium of 7.14% to 9.20% over the closing market price on March 25, 2022 and volume weighted average price of six months.
Astana Setia has an existing RM395.9 million GDV for its Residensi Laman Segar Hijau (LSH Segar) development project in Taman Segar, Cheras. Astana Setia’s flagship LSH Segar project has secured 100% uptake under the Rumawip affordable housing scheme, and 70% uptake among open units. Astana Setia has an external construction order book of RM390.81 million, of which RM146.82 million is still outstanding.
Th proposed transaction with LSH Ventures involves the acquisition of four parcels of land and buildings on-site across Kuala Lumpur, Kajang and Johor Baru for RM8.14 million. In addition, LSH Capital will settle RM54 million amount owing to directors of LSH Venture.
Upon completion, LSH Capital will own 99% in LSH Ventures and will have 93.75% effective interest in Astana Setia & Euro Saga Sdn Bhd, an entity which will launch the upcoming flagship project “Lake Side Homes” on a 11.85-acre land in Sungai Besi with an estimated GDV of RM1.19 billion.
LSH Capital will seek shareholder approval to expand its core businesses to include property and construction-related business as these new integrated upstream businesses are expected to contribute more than 25% of the group’s net profit, moving forward.
Chairman Tan Sri Lim Keng Cheng (pix) said since its LEAP Market listing in July 2021, LSH Capital has ramped up its growth efforts, while rewarding shareholders with strong earnings performance in the latest financial year ended Sept 30, 2021 (FY21) and dividends of RM2.34 million, to meet the 30% benchmark set by the group.
“The latest exercise puts the group on the right track towards strengthening its presence in the local construction and property development sectors and to become a billion-ringgit company in the long run,” he said.
Astramina Advisory Sdn Bhd is the approved adviser and continuing adviser for LSH Capital and is the appointed adviser for the proposed corporate exercises.
LSH Capital’s expansion of its property development venture also allows it to better synergise the operations currently undertaken by Lim Seong Hai Lighting Sdn Bhd and Knight Auto Sdn Bhd, subsidiaries of LSH Capital with a continuous emphasis on the BEST Framework, that was introduced in 2021 to improve its project execution and business proposition. This will expand the construction business together with the inclusion of property development and property investment, will allow the group to achieve significant involvement in the supply chains in the construction industry.
This is in line with the BEST Framework adopted by LSH Capital with the aims to transform the core foundation of the construction industry.
The BEST Framework supports both projects and clients via the blue ocean strategy to secure sales and contracts; enhancement solutions for finance in cash flow planning; sustainability, made affordable for business policymaking, as well as transformation and innovation in engineering solutions and project execution.
LSH Capital has implemented the BEST Framework in building and infrastructure projects in Kuala Lumpur, Penang, Johor, Negri Sembilan, Kedah, Pahang and Sabah, and now seeks to repeat its success in the LSH Segar project and Lake Side Homes project moving forward.
Aside from LSH Segar and Lake Side Homes, LSH Capital also has its sights on other property projects that spans parts of Klang Valley including the Sentul Ria Development in Sentul, the LSH Tower in Taman Tasik Titiwangsa, and the LSH Titiwangsa along Jalan Pahang, Kuala Lumpur, which are currently owned by Lim Seong Hai Holdings Sdn Bhd, the ultimate holding company of LSH Capital.
