KUALA LUMPUR (July 5): Scientex Bhd is buying 960 acres of prime freehold land in Tebrau, Johor Bahru from S P Setia Bhd for RM547.65 million, after previously attempting to buy the same plots of land but having to abort the deal due to a condition not being fulfilled.

In 2021, the group's wholly owned subsidiary Scientex Quatari Sdn Bhd proposed to buy the land for RM518.1 million, but the purchase was terminated in March 2023 after it failed to obtain a waiver of the bumiputera equity condition imposed by the Economic Planning Unit (EPU).

In a statement on Wednesday (July 5), Scientex said the acquisition is subject to approval by the Estate Land Board and the EPU of the Prime Minister's Department and if required, the approval of Scientex's shareholders.

Scientex intends to launch a new mixed township development project on the land, where an estimated 12,000 affordable homes would be built. The project's gross development value is yet to be determined.

Its indirectly owned Scientex Lestari Sdn Bhd on Wednesday inked a conditional sale and purchase agreement with Pelangi Sdn Bhd, a wholly owned unit of S P Setia.

Scientex Lestari is a joint venture between Scientex Quatari, which holds a 70% stake, and Datuk Azman Mahmud, who holds the remaining 30% stake.

According to Scientex, the proposed acquisition will be financed by internally generated funds and bank borrowings, with completion targeted for the first half of 2024. At end-April, the group had RM621.4 million in short-term borrowings and RM250 million in long-term borrowings.

The land is accessible from major highways such as the Senai Desaru Expressway, and falls under the jurisdiction of the Johor Bahru City Council.  

Scientex said the land acquisition will significantly expand its property development footprint in Johor. Meanwhile, its total land bank — across Johor, Melaka, Negeri Sembilan, Selangor, Perak, Penang and Kedah — would expand from approximately 6,700 acres to around 7,660 acres.

"The anticipated new mixed township development in Tebrau district aligns with our vision of constructing 50,000 affordable homes across Peninsular Malaysia by 2028. As of June 30, 2023, we have reached the milestone of delivering 29,000 homes which reflects our steady progress. This strategic expansion enables us to create a vibrant township in Tebrau district and contribute to Johor's development," said Scientex chief executive officer Lim Peng Jin.

Separately, S P Setia said, the sale consideration of RM547.65 million, calculated at the rate of RM13.10 psf on gross land area, was arrived at between the parties on a "willing-buyer willing-seller" basis.

Upon completion of the land disposal, the property developer will receive an estimated gain of approximately RM438.3 million while its net assets will increase by about RM320.3 million and cash balance will rise by RM441.4 million, its filing showed.

The proceeds from the exercise are expected to be used for investment into strategic project developments and repayment of bank borrowings, S P Setia said.

"The proposed disposal will improve the group's gearing level and allow acceleration of project development and growth of S P Setia's remaining townships in Johor," it said, adding that the exercise is in line with the group's direction to optimise and rebalance its land bank while maintaining an efficient capital structure.

Less than a month ago, S P Setia signed three inter-conditional sale and purchase agreements with Mah Sing Group Bhd for the disposal of about 500 acres of land in the Beranang district in Ulu Langat for RM392.04 million. S P Setia will receive an estimated RM31 million gain on completion of the disposal in the second quarter of 2024.

At Wednesday's closing bell, Scientex's share price was up five sen or 1.46% at RM3.47, giving it a market capitalisation of RM5.38 billion. S P Setia increased half a sen or 0.89% at 56.5 sen, valuing it at RM2.28 billion.