‘NEUTRAL’ STANCE ON MEDIA PRIMA
Disposal of Port Klang land to AFES for RM25m will help media conglomerate to pare down bank borrowings
MEDIA Prima Bhd’s sale of a parcel of leasehold industrial land in Port Klang to Malakoff Corp Bhd will reduce the media conglomerate’s bank borrowings.
MIDF Research said cash proceeds from the proposed disposal would be fully utilised to pare down the company’s bank borrowings, subsequently helping Media Prima meet its cash flow requirements.
The research firm said the sale would also reduce the annual outgoing costs on the land.
Media Prima had announced a plan to dispose of the land to Alam Flora Environmental Solutions
Sdn Bhd (AFES), a subsidiary of Malakoff Corp, for RM25 million.
MIDF Research said the land sale was expected to give rise to a one-off net gain of RM12.1 million to Media Prima.
“The company’s borrowings, which stood at RM125.5 million as of Dec 31 last year, will be reduced by about 20 per cent.
“This will subsequently lead to a slight reduction in gross gearing ratio from 0.54 times to 0.49 times,” it said in a research note yesterday.
AFES said it would develop the area into an integrated waste facility as it had a more than 500m buffer zone to the nearest sensitive receptors.
The land houses two singlestorey detached warehouses acquired by Media Prima’s subsidiary, The New Straits Times Properties Sdn Bhd, 15 years ago at the cost of RM13.3 million.
MIDF Research said the land’s book value as at end of last year was RM11.7 million.
The deal is consistent with Media Prima’s plan to dispose of properties in locations deemed not to have an immediate development potential, it said.
The disposal would reduce Media Prima’s gearing level and decrease the annual outgoing costs on its lands.
“We are ‘neutral’ on this development and retain our target price of 64 sen for Media Prima, pegged by a target price-to-book ratio of 1.1 times to its financial year 2022 book per share estimate of 58 sen, which is a premium to its historical two-year average price-to-book ratio,” it added.