Benalec disposing of more land in Melaka

by **Cals** Thu 26 Sep 2013, 14:48

Benalec disposing of more land in Melaka
Business & Markets 2013
Written by Affin IB Research
Thursday, 26 September 2013 11:38

Benalec Holdings Bhd
(Sept 25, RM1.21)
Maintain trading buy at RM1.19 with a target price of RM1.98: Benalec has announced that Orientalcove Property Sdn Bhd, a wholly owned subsidiary of Benalec Sdn Bhd (which in turn is a wholly owned subsidiary of Benalec) had on Sept 24 entered into a conditional sale and purchase agreement with Ultra Harmony Development to dispose of six pieces of leasehold vacant land in Melaka for a total cash consideration of RM51 million or about RM39 per sq ft (psf). The tracts are located in Pekan Klebang Seksyen III in Daerah Melaka Tengah and measure approximately 121,404 sq m.

This sale follows the disposal of eight pieces of land measuring about 168,160 sq m in the same vicinity for a total cash consideration of RM54.3 million or about RM30 psf two months ago.

The latest land disposal is expected to be completed by the first quarter (1Q) of 2014 and will result in a net gain of RM9.2 million or about RM7 psf compared to a net gain of RM7.1 million or about RM4 psf for the July land disposal.

Rising demand and selling prices of land in the reclamation concession area off Melaka bodes well for the group as it still has about 360 acres of landbank as well as a significant area to be reclaimed in the area. The group also has landbank for sale in Selangor.

We expect more disposals in the coming months.

While disposal of its landbank at higher prices is positive, we still see the signing of a definitive sale and purchase agreement (SPA) with 1MY Strategic Oil Terminal Sdn Bhd for the reclamation of about 1,000 acres of land off the coast of Tanjung Piai in Johor as a more significant share price driver.

Management remains confident that a definitive SPA will be signed by Dec 11, 2013. We maintain our forecasts for 2013 financial year (FY13) to FY15 and “trading buy” call. — Affin IB Research, Sept 25

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This article first appeared in The Edge Financial Daily, on September 26, 2013.