Melati Ehsan Holdings Bhd has finally completed the purchase of three leasehold land parcels in Selayang, Selangor, for RM70 million in cash.

The company informed Bursa Malaysia yesterday that the transaction was carried out in accordance with the terms and conditions of the April 15, 2016 sale and purchase agreement.

Melati Ehsan purchased the land from Aturan Utama Sdn Bhd (AUSB) through its wholly-owned subsidiary, Bayu Melati Sdn Bhd (BMSB), for a proposed mixed commercial development.

The land price was RM77.74 million when Melati Ehsan first announced the proposed acquisition in April 2016.

Melati Ehsan informed Bursa Malaysia on June 28, 2016, that it had appointed Rahim & Co International Sdn Bhd as an independent valuer of the land. On April 3, 2017, the firm valued the land at RM80 million.

The company stated at the time that if the required planning approval for BMSB’s proposed commercial development on the land includes a condition requiring it to build low cost and/or affordable homes under an affordable housing scheme known as “Rumah SelangorKu,” the purchase price for the land will be reduced to RM70 million.

The proposed acquisition is also in line with the company’s intention to build up its land bank in strategic locations with high development value and contribute to future earnings, it said.

Melati Ehsan recorded revenue of RM112.91 million and pre-tax profit of RM4.63 million for the fiscal year ended August 31, 2021, compared to RM254 million and RM4.7 million for the previous year.

According to a stock exchange filing last month, revenue was lower in the fiscal year under review compared to the previous year due to lower construction activities.

The construction division earned RM92.75 million in revenue and RM1.22 million in pre-tax profit, compared to RM245.7 million and RM8.5 million in the previous year.

The company’s property development division generated RM20.11 million in revenue and a pre-tax profit of RM698,000, compared to zero contribution and a pre-tax loss of RM803,000 the previous year. This segment’s performance was primarily attributed to the Meridian project in Kluang, Johor, and the sale of shop offices in Pandamaran, Klang.

Melati Ehsan anticipates that the overall local property market will remain weak.

It said the key issues affecting the property market are buyer sentiment, the overhang of certain property segments, rising living costs, and tight financing arrangements.

Meanwhile, Melati Ehsan announced on December 8 that it is selling two parcels of leasehold land in Bukit Tunku, Kuala Lumpur, for RM41.72 million.

For the land sale, its wholly-owned property development subsidiary Asas Jiwa Sdn Bhd has entered into a sale and purchase agreement with Calistoga Land Sdn Bhd.

Melati Ehsan stated that the proceeds from the proposed sale will be used to supplement the company’s working capital.

According to the filing, the estimated net gain is RM14.23 million.

“The proposed disposal will enable Melati Ehsan to free up capital resources that have been locked up as long-term assets and realise the value of the said properties at fair market value while improving the company’s liquidity and financial position,” it said.

Source: NewStraitsTimes, Kathy B. /December 23, 2021

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