Lim Seong Hai Capital Berhad (LSH Capital) is seeking shareholder approval to further diversify LSH Capital Group's existing core businesses to include property development activities to increase revenue and earnings contribution in the long run.
LSH Capital said that it has deliberated and proposes to diversify the primary activities of the LSH Capital Group due to the complementary nature of the construction business and property development contributions, which will also be one of the key avenues for increasing the group's construction order books.
It stated in a stock exchange filing yesterday that, despite the estimated revenue and earnings contribution by the property development business for the fiscal year ending September 30, 2023, which is less than 25 per cent of the enlarged LSH Capital Group's net profits, it expects a significant increase in revenue and earnings contribution from the property development business in the long run.
This is due to the complementary nature of the construction and property development industries, the company said.
LSH Capital is proposing to acquire Astana Setia Sdn Bhd (ASSB) and LSH Ventures.
It expects a further build-up of its construction order books following the completion of the proposed acquisitions through contracts to be awarded by ASSB and ASES in relation to their respective property projects, namely LSH Segar and Lake Side Homes, to other business divisions within the LSH Capital Group.
LSH Capital said that it intends to award all construction works arising from the LSH Segar and Lake Side Homes projects to its other subsidiaries, namely LSH BEST Builders Sdn Bhd, LSH Lighting Sdn Bhd, and Knight Auto Sdn Bhd, as part of the LSH Capital Group's complementary integration of the construction, building materials and machinery, and property development divisions.
The company also expects to expand its property development portfolio through LSH Segar and Lake Side Homes, which have an estimated gross development value (GDV) of about RM1.59 billion and an estimated gross development profit (GDP) of about RM391.1 million, providing earnings visibility until 2026.
The Lake Side Houses project has a GDV of RM1.19 billion and a GDP of RM297.5 million, whereas the LSH Segar project has a GDV of RM395.9 million and a GDP of RM93.6 million.