LSH Capital inks upstream integration, expands into property
KUALA LUMPUR: Lim Seong Hai Capital Bhd (LSH Capital) has announced a series of corporate proposals which marks its upstream integration expansion into property development, and to further strengthen its fast-growing construction business.
In a press statement, it said, upon completion of the proposals, the LSH Capital Group will have an enlarged secured construction orderbook amounting to RM1.1 billion in aggregate with an overall outstanding orderbook of RM782.0 million and also carry a property development project with GDV of RM1.59 billion which is expected to provide earnings visibility until 2026.
In addition, the LSH Capital Group is involved in construction and property development projects amounting to RM2.7 billion via the BEST Framework collaboration. This collaboration will enable the group to earn a certain portion in fees for various value creation efforts.
The corporate proposals entail a combined acquisition value of RM157.6 million via the execution of share sale agreement to acquire 100 per cent in Astana Setia Sdn Bhd (Astana Setia) for RM95 million, Assets Exchange Agreement and Debt Settlement cum Share Subscription Agreement with LSH Ventures Sdn Bhd (LSH Ventures) for a total value of approximately RM62 million to be full satisfied via issuance of new LSH Capital shares at 45 sen, which presents a premium of 7.14 per cent to 9.20 per cent over the closing market price on 25 March 2022 and volume weighted average price of 6 months.
Astana Setia has an existing RM395.9 million GDV for its Residensi Laman Segar Hijau (LSH Segar) development project in Taman Segar, Cheras. Astana Setia’s flagship LSH Segar project has secured 100 per cent uptake under the RUMAWIP affordable housing scheme, and 70 per cent uptake among open units. Astana Setia also has an external construction order book of RM390.81 million, of which RM146.82 million is still outstanding.
Th proposed transaction with LSH Ventures involves the acquisition of four parcels of lands and buildings on-site in attractive locations across Kuala Lumpur, Kajang and Johor Bahru for a consideration of RM8.14 million. In addition, LSH Capital will settle approximately RM54 million amount owing to directors of LSH Venture.
Upon completion, LSH Capital will own 99 per cent in LSH Ventures and will have 93.75 per cent effective interest in Astana Setia & Euro Saga Sdn Bhd (Astana Setia Eugo Saga), an entity which will launch the upcoming flagship project ‘Lake Side Homes’ on a 11.85acre land in Sungai Besi with an estimated GDV of RM1.19 billion.
LSH Capital will also seek shareholder approval to expand its core businesses to include property and constructionrelated business as these new integrated upstream businesses are expected to contribute more than 25 per cent of the group’s net profit, moving forward.
“Since its LEAP Market listing in July 2021, LSH Capital has ramped up its growth efforts, while rewarding shareholders with strong earnings performance in the latest financial year ended September 30, 2021 (FY21) and dividends of RM2.34 million, to meet the 30 per cent benchmark set by the group,” said Tan Sri Lim Keng Cheng.
“The latest exercise puts the group on the right track towards strengthening its presence in the local construction and property development sectors and to become a billion-ringgit company in the long run,” he said.
Astramina Advisory Sdn Bhd is the Approved Adviser and Continuing Adviser for LSH Capital and is the appointed Adviser for the proposed corporate exercises.
LSH Capital’s expansion of its property development venture also allows it to better synergise the operations currently undertaken by Lim Seong Hai Lighting Sdn Bhd and Knight Auto Sdn Bhd, subsidiaries of LSH Capital with a continuous emphasis on the BEST Framework, that was introduced in 2021 to improve its project execution and business proposition.