Minetech eyes land in Perak to diversify into property segment

by **Cals** Tue 06 Oct 2015, 02:06

Minetech eyes land in Perak to diversify into property segment

By Sangeetha Amarthalingam / theedgemarkets.com | October 5, 2015 : 10:37 PM MYT

KUALA LUMPUR (Oct 5): Quarry operator [size=16]Minetech Resources Bhd ([You must be registered and logged in to see this image.] Valuation: 0.90, Fundamental: 1.15) has proposed to acquire four parcels of land in Perak, as part of its plans to diversify its existing business to include property development.

In a filing with Bursa Malaysia, Minetech said it signed a conditional sale and purchase agreement with Glamour Heights Sdn Bhd today, to acquire a 7,924 sq m parcel of vacant residential development land in Kinta, Perak for RM6 million cash.

The land is approved for the development of a 21-storey mixed project, in which Minetech will be the main developer, while Glamour Heights will be the co-developer to assist in the construction of the Glamour Avenue project.

"The building plans for the Glamour Avenue project was approved by Majlis Bandaraya Ipoh on Feb 28, 2014. Based on current planning, the estimated gross development value (GDV) and the estimated gross development cost (GDC) of the project are RM76.97 million and RM68.99 million respectively, yielding an estimated profit of RM7.98 million to Minetech," said the group.

"The exact GDV and GDC can only be ascertained when the development of Glamour Avenue Project is completed. As at the latest practicable date (LPD), Glamour Heights has commissioned preliminary works on the development, including earthworks and relocation of sewerage pipelines," it added.

Minetech noted the development of the Glamour Avenue project will represent its maiden venture into the property development industry.

It expects to fund the purchase consideration using its internal funds and/or bank borrowings.

Additionally, Minetech is proposing to acquire two companies namely Medium Visa Sdn Bhd (MVSB) and Harapan Iringan Sdn Bhd (HISB), for RM9.43 million and RM7.51 million respectively.

MVSB currently owns two parcels of adjacent leasehold lands (Land A and Land B) in Bernam Timur, Perak, measuring 124,136.7 sq m. HISB, meanwhile, also owns a 99,730 sq m parcel of leasehold land (Land C), also in Bernam Timur.

"Land A and Land B are largely vacant industrial lands adjacent to Land C (also a parcel of vacant industrial land), which are located approximately 5km east of Tanjung Malim town centre," said Minetech.

"The immediate surroundings of Land A, Land B and Land C are industrial zones such as Proton City Industrial Park, [and] Behrang 2020 Industrial Park; and education centres such as Universiti Pendidikan Sultan Idris and Politeknik Sultan Azlan Shah," it added.

Minetech intends to fund the acquisitions of MVSB and HISB using the proceeds from its rights issue in 2014, subject to approval from its shareholders at an extraordinary general meeting (EGM) to be convened.

In today's announcement, Minetech is also proposing a revision of intended use of proceeds arising from its rights issue, which was completed on Dec 8, 2014, in which it had raised RM49.86 million. As at the LPD, the group has utilised RM19.36 million from the total rights issue.

MRB is proposing to reallocate RM20 million of the rights issue proceeds, originally allocated for purchase of quarry sites, to be used to fund the group’s distribution of heavy machineries and working capital requirements.

"While the group remains interested in purchasing new quarry sites, it presently has yet to identify any viable target quarry sites," it said.

Minetech is also proposing to set up a share issuance scheme of up to 15% of its issued share capital at any one time during the duration of the scheme, for eligible directors and employees of the group. It intends to utilise the proceeds arising from the exercise, for its working capital.

The group said it expects the various proposals to be completed in the first quarter of 2016.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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