In a bourse filing yesterday, UEM Sunrise said it had disposed of its stake in the JV company, Aura Muhibah Sdn Bhd (AMSB), to KLK’s wholly owned property development arm KLK Land Sdn Bhd after the latter exercised its call option.
The JV was established a decade ago in 2014 to undertake the development of Fraser Metropolis, comprising mixed residential, commercial and industrial properties in the area.
The latest transaction is expected to provide a significant boost to the plantation giant’s property development segment. This consolidation of ownership enables KLK to take full control of future development plans for the sprawling land in southern Johor.
This is not the first disposal of shares in the JV by UEM Sunrise. In 2020, it sold 20% of its 60% stake in AMSB to KLK Land for RM182.6 million. KLK’s unit previously held a minority stake of 40%.
The filing stated the sales proceeds of RM386.2 million would be utilised to pare down the property group’s outstanding debt upon maturity by year-end, reducing its gross gearing from 0.61 times to 0.55 times.
UEM Sunrise said the disposal was aligned with its turnaround strategic plan to transform into a “balanced real estate player” with the goal of strengthening financial performance through the monetisation of non-strategic lands and assets.
It said this was an opportunity to realise a gain on disposal and unlock the value of one of its longstanding assets. The group is expected to recognise a net disposal gain of RM32 million.
“This will also allow the company to strategically focus on its other assets in the southern region, particularly the industrial developments in Gerbang Nusajaya, Iskandar Puteri,” it added.
The deal is expected to be completed by June 29.
In a note today, Kenanga Research said with full control of AMSB, KLK will have greater flexibility in rolling out the property project.
“Located in the Senai-Skudai area, Phase 1 was to cover 2,500 acres with an estimated gross development value (GDV) of RM15 billion over 15-20 years,” it said.
It noted that at RM9 per sq ft (psf), the valuation appears to be “undemanding” as compared with the RM13.50 psf that Senibong Island Sdn Bhd paid SP Setia Bhd for 959.7 acres of land in neighbouring Tebrau recently. Senibong Island is reportedly linked to tycoon Syed Mokhtar Al-Bukhary, the note said.
The research house maintained its “hold” call on KLK while keeping its target price at RM21.
At the mid-day break, KLK’s shares were down 2 sen or 0.1% to RM20.20, giving it a market capitalisation of RM22.2 billion. UEM Sunrise was down 1 sen or 0.9% at RM1.15, valuing the group at RM5.82 billion.