BY P. ARUNA
Hua Yang CEO Ho Wen Yan(insetpic) said the group saw “significant opportunities and synergies” between the two companies that it could leverage to drive growth for both groups...“Although we already hold strategic landbanks in this region, this collaboration allows us to invest in existing landbanks that hold strong potential for growth, such as those in Jalan Ampang, Kuala Lumpur; Jalan Gasing, Petaling Jaya, as well as Seksyen 15, Shah Alam, amongst others,” he said in a statement.
PETALING JAYA: Mid-sized property developer Hua Yang Bhd is acquiring an additional 20.12% stake in Magna Prima Bhd, a move that essentially seals its substantial interest in the latter.
Magna Prima’s most prized asset is the 2.62 acres that used to house the Lai Meng School along Jalan Ampang. The land is located just a stone’s throw away from the iconic Petronas Twin Towers.
Hua Yang’s increased investment in Magna Prima, which now stands at 30.96%, makes it the single largest shareholder in the company.
Hua Yang, via its unit Prisma Pelangi Sdn Bhd, is forking out RM123.7mil or RM1.85 per share to six parties for the additional 20.12% stake in Magna Prima.
The price is almost 20% higher than Magna Prima’s closing price yesterday of RM1.54.
The group said that the valuation was based on Magna Prima’s net asset value of RM1.82 at Dec 31, 2016.
Magna Prima’s share price has risen by 57% over the past six months, outperforming its peers by a wide margin.
Hua Yang CEO Ho Wen Yan said the group saw “significant opportunities and synergies” between the two companies that it could leverage to drive growth for both groups.
“This move also reaffirms our commitment to strengthen the group’s presence in the Klang Valley.
“Although we already hold strategic landbanks in this region, this collaboration allows us to invest in existing landbanks that hold strong potential for growth, such as those in Jalan Ampang, Kuala Lumpur; Jalan Gasing, Petaling Jaya, as well as Seksyen 15, Shah Alam, amongst others,” he said in a statement.
He added that through the move, Hua Yang would be able to expand its market presence and recognise a proportionate share of Magna Prima’s future profits.
The proposed acquisition is conditional upon the agreement of Hua Yang’s shareholders.
The shares are to be acquired from Fantastic Realty Sdn Bhd and five other individuals.
With the increased stake, Hua Yang will become the single largest shareholder in Magna Prima.
It previously owned a 10.84% stake in the group, which was acquired on Jan 25, 2017.
In its filing to the stock exchange, the group said the acquisition would be funded through internally generated funds and borrowings.
Magna Prima is mainly involved in property development, civil engineering and building construction, the manufacturing and trading of ready-mixed concrete, as well as property management services.
Its landbank is predominantly located in Jalan Ampang, Petaling Jaya, Shah Alam and Mentakab.
According to Magna Prima’s latest annual report, the aggregate value of the land is about RM580mil based on a fair value and net book value.
Among Magna Prima’s notable projects include The Istana in Melbourne, Australia, and The Avare condominium@ KLCC.
For the financial year ended Dec 31, 2015, Magna Prima saw its net profit plunge by 89% to RM44.8mil on the back of a RM142.7mil revenue, which fell 82%.
In its filing with the stock exchange, the company attributed the fall in profit to lower recognition of revenue.
Hua Yang and its subsidiaries, on the other hand, have a total landbank of about 600 acres, which include 35 acres within the Klang Valley.
It said the proposed acquisition was in line with its plans to invest in companies which hold landbank in strategic locations which are easily accessible and surrounded by ready amenities.
“The proposed acquisition may create an avenue for the company to explore potential collaboration or joint-venture opportunities with Magna Prima for the acquisition of landbank, as well as the undertaking of development projects in the future,” it said.
On Feb 13, 2017, Magna Prima announced Ho’s appointment as an executive director of the group.
Hua Yang said this was to ensure that it had a representative on the board to deliberate on key policies and strategies, as well as to safeguard the group’s interest in Magna Prima.
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