KUALA LUMPUR (Oct 6): Karyon Industries Bhd is selling a piece of vacant freehold industrial land to Parit Yusof Oil Mill Sdn Bhd for about RM4.72 million.

According to a filing with Bursa Malaysia, Hsing Lung Sdn Bhd, a wholly-owned subsidiary of Karyon, had entered into a sale and purchase agreement with Parit Yusof for the disposal of the subject property .

It added that the proposed disposal represents an opportunity for Hsing Lung to unlock the value of assets that do not contribute towards the core business of Karyon and its subsidiaries, as the land is currently not in use.

"The proposed disposal would also discharge Hsing Lung or the Karyon Group from the subject property's future holding and maintenance costs," it said.

The filing also said Karyon's board is of the opinion that it would be more efficient to utilise the proceeds received from the proposed disposal for the group's working capital purposes rather than leaving the land idle.

The gross proceeds of RM4.4 million will be used for working capital and for the estimated expenses in relation to the proposed disposal.

The selling price was arrived at on a willing buyer-willing seller basis after taking into consideration the market value of the subject property of RM4.6 million as ascribed by an independent valuer VPC Alliance (JB) Sdn Bhd on Oct 2 this year, using the comparison method.

The land was acquired by Hsing Lung in 2006 with a cost of investment of about RM1.8 million. Its total net book value based on the latest audited financial statements of Hsing Lung as at March 31 this year is about RM1.8 million.

The filing also said the proposed disposal is not expected to materially affect the earnings of Karyon but is expected to contribute positively to the earnings of the group as the proposed disposal will result in a gain of about RM2.7 million for the financial year ending March 31, 2018 (FY18).

It is expected that the proposed disposal will be completed by the first quarter of 2018.

As of closing, Karyon slipped by 1.92% to 25.5 sen with about 1.5 million shares traded, giving it a market capitalisation of RM123.7 million.