Lim Seong Hai Capital Bhd (LSHC) has announced a series of corporate proposals totaling RM157.6 million in acquisition value, paving the way for it to become a billion-ringgit company in the long run.
The company intends to expand into property development and strengthen its rapidly growing construction business.
After the proposals are completed, LSHC will have an expanded secured construction order book worth RM1.1 billion, with an overall outstanding order book of RM782 million.
Its property development division will also have property projects with a combined gross development value (GDV) of RM1.59 billion, with earnings visibility until 2026.
The proposals entail a combined acquisition value of RM157.6 million through the execution of a share sale agreement to acquire 100 per cent of Astana Setia Sdn Bhd for RM95 million, an assets exchange agreement, and a debt settlement cum share subscription agreement with LSH Ventures Sdn Bhd for RM62 million, which will be fully satisfied through the issuance of new LSHC shares at 45 sen, representing a premium of 7.14 per cent to 9.2 per cent over the closing market price on March 25, 2022, and the volume-weighted average price of six months.
Non- executive chairman Tan Sri Lim Keng Cheng said that since its LEAP Market listing in July 2021, LSHC has increased its growth efforts while rewarding shareholders with strong earnings performance in the fiscal year ended September 30, 2021, and dividends of RM2.34 million, to meet the group's 30 per cent dividend benchmark.
Lim said that the latest exercise puts LSHC on the right track to increasing its presence in the local construction and property development sectors.
Astana Setia's Residensi Laman Segar Hijau development project in Taman Segar, Cheras, has an existing GDV of RM395.9 million, according to the statement.
In addition, Astana Setia has an external construction order book worth RM390.81 million, of which RM146.82 million is still outstanding.
The proposed transaction with LSH Ventures involves the purchase of four parcels of land and buildings in Kuala Lumpur, Kajang, and Johor Bahru for RM8.14 million.
Furthermore, LSHC will settle an RM54 million debt owed to the directors of LSH Venture.
Upon completion, LSHC will own 99 per cent of LSH Ventures and 93.75 per cent of Astana Setia & Euro Saga Sdn Bhd, which is launching Lake Side Homes in Sungai Besi with an RM1.19 billion GDV.
LSHC is currently involved in RM2.7 billion in construction and property development projects through the BEST Framework collaboration, which allows the company to earn a portion of the fees for various value creation efforts.
The company will seek shareholder approval to expand its core businesses to include property and construction-related businesses, with the expectation that these new integrated upstream businesses will contribute more than 25 per cent of the group's net profit, moving forward.