Scientex to acquire 826 acres of Kuala Selangor land for RM336 mln

KUCHING: Property developer and plastics packaging player Scientex Bhd (Scientex) via its wholly-owned subsidiary Scientex Park (M) Sdn Bhd proposed to acquire an 825-acre parcel of land in Mukim Batang Berjuntal, Kuala Selangor from Metalplex Plantation Sdn Bhd (Metalplex) for a total cash consideration of RM3335.7 million.

In a filing with Bursa Malaysia, Scientex announced that it intends to build a mixed property development on the land which is located between Ijok Town and Bestari Jaya Town.

It stated that the close proximity of the proposed development to its existing projects, Scientex Kundang Jaya that is 25km away and Scientex Rawang that is 36km away would allow them to tap into existing resources and generate better operational efficiencies and economies of scale during project implementation.

It added that the landbank expansion exercise is also in line with its goal to build more affordable homes to meet its objective of completing 50,000 affordable homes throughout Malaysia by 2028.

The proposed acquisition is expected to be completed by the first half of 2025 (1H25).

Overall, analysts were positive of the proposed acquisition as it would allow the property developer to expand its footprint into Northern Selangor while also building on its past success in the affordable housing segment.

Analysts at Kenanga Investment Bank Bhd (Kenanga Research) also noted that the proposed acquisition price translates to a price tag of RM9.33 per square feet (psf) which is a discount to the agricultural land asking prices of RM12 to 13 psf in surrounding areas.

“We believe the discount could be attributed to the location being at a distance away from the Kuala Selangor town area, potentially low land efficiency owing to land use restrictions and the requirement for additional investment in basic amenities,” it explained.

Additionally, the research arm guided that the acquisition which will be funded by internally generated funds is not expected to pose a significant risk on Scientex as it believed the higher net debt and net-gearing will still be highly manageable for the group.

Post-acquisition, Scientex’s net debt and net gearing is expected to rise from RM515 million and 0.15-fold at the end of Oct 2023 to RM851 million to 0.24-fold.

Since the group’s announcement of the proposed land acquisition on March 8, Scientex’s share price which opened at RM3.880 on March 11 has grown by 2.34 per cent to RM3.940 at time of writing.