KUALA LUMPUR (July 1): Sapura Industrial Bhd (KL:SAPIND) is disposing of 40,964 sq m of leasehold industrial land in Bandar Baru Bangi for RM42.33 million cash, using the proceeds to expand its automotive components manufacturing operations and acquire new industrial land.
The company entered into a sale and purchase agreement with Zeito Plastic Components Sdn Bhd on Wednesday for the disposal, according to a bourse filing.
The land, held under leasehold titles expiring in July 2103, is currently classified as vacant industrial land but parts of the property are leased out and generate rental income.
The disposal price represents a premium of about 4.3% over the independent valuation of RM40.6 million as at April 30 and significantly exceeds the net book value of RM9.1 million as at Jan 31.
Sapura Industrial expects to recognise a one-off net gain of RM29.14 million from the disposal, after accounting for transaction expenses and real property gains tax.
Based on pro forma calculations, the transaction would lift the company's net assets per share to RM2.05 from RM1.65 while reducing its gearing ratio to 0.32 times from 0.40 times.
Of the proceeds, RM23.12 million has been allocated to expand the group's manufacturing, machining and assembly lines for automotive products such as stabiliser bars, coil springs and brake discs through the purchase of new high-precision machining and specialised assembly equipment.
Another RM12 million has been earmarked to acquire land or properties for new plants located closer to customers while RM3.11 million will be used for working capital. The balance will go towards expenses related to the disposal.
The company said the disposal would allow it to unlock the value of non-core assets held for more than 20 years and redeploy the capital into higher-return operational activities. It added that expanding plants nearer to customers would better support its future growth plans.
Shares in Sapura Industrial closed up 4.5 sen or 5.6% at 85 sen on Wednesday, valuing the company at RM61.86 million. Over the past one year, the stock has declined 2.3%.