On top of that, YNH will receive an additional RM50 million from Sunway if it can obtain a new development order (NDO) for a project with a minimum plot ratio of seven in the net land area (NLA), within one year from the date of the sales and purchase agreement (SPA).
The plot currently has an existing DO for a minimum plot ratio of five on the NLA. The proposed disposal will still proceed even if YNH fails to obtain the NDO within the stipulated period.
YNH announced today its wholly owned subsidiary Kar Sin Bhd (KSB) has entered into an SPA for the land with Imbuhan Sempurna Sdn Bhd, Great Wall Park Sdn Bhd, and Sunway Living Space Sdn Bhd, a unit of Sunway City Sdn Bhd, a wholly owned subsidiary of Sunway Bhd.
In a statement today, YNH general manager James Ngio said the additional RM50 million acts as an incentive for the group to obtain the NDO for the purchasers.
“We had agreed with this additional clause because we are confident we will be able to obtain the NDO, leveraging on our track record and expertise in this area as well as the strategic location of the land bank,” he said, adding the value of the land will increase with an NDO.
The disposal will result in an estimated gain of approximately RM2.6 million to YNH, after taking into consideration the estimated expenses of RM800,000 in relation to the disposal.
According to its filing with Bursa Malaysia today, the group said the net proceeds arising from the sale is expected to be utilised for its working capital.
This includes repayment of bank borrowings which will result in interest saving of RM3.71 million per annum, and is expected to reduce its gearing ratio from 0.65 to 0.59.
“The proposed disposal provides an opportunity for YNH to realise and unlock the value of its investment while strengthening the group’s liquidity and cash flow position,” Ngio said.
The land sale is the company’s third asset disposal in recent months. It disposed two retail malls – the 163 Retail Park in Mont Kiara and AEON Mall Seri Manjung in Perak – to ALX Asset Bhd in March this year for RM423 million cash.
YNH said then the disposals provide it more leeway to secure future funding to finance other projects, as well as for the launch of its flagship Menara YNH project, which has an estimated GDV of RM3 billion.
Meanwhile, Sarena Cheah, the managing director of Sunway’s property arm, Sunway Property, said Sunway was pleased to add this prime land to its portfolio, and continue its commitment to creating vibrant integrated communities.
“This acquisition comes ready with an approved DO with a plot ratio of five, and we target to launch this development by early 2025,” she said in a statement.
For the financial year ended Dec 31, 2022 (FY2022), the group widened its net loss to RM14.59 million from a net loss of RM2.79 million in FY2021.
Revenue fell to RM210.75 million in FY2022 from the preceding year’s RM231.28 million.
At the close of trade today, YNH’s shares were up 8 sen or 1.66% at RM4.90 with a market capitalisation of RM2.59 billion. Last Friday, the counter hit its record high of RM5.20.