PETALING JAYA: Shares of Global Oriental Bhd (GOB) closed lower despite the company’s announcement of a plan to acquire 279.86 acres of freehold land in Bentong, Pahang for RM170.67mil.
The property developer saw its share price move half-sen down to 43.5 sen in early trade, then going lower to 43 sen before ending at 43.5 sen.
GOB announced on Monday that the company’s 51%-owned subsidiary Sering Manis Sdn Bhd would be buying the land located just 11km from the peak of Genting Highlands to expand its property development segment.
The company said the land would be used for development of a resort that would include residential and commercial components.
“The land is surrounded by lush greenery and its close proximity to Genting Highlands would present potential for resort-like residential and commercial development.
“In view of the strategic location and good development potential of the land, the proposed acquisition is expected to contribute positively to future earnings of GOB group,” it said.
The company expects the acquisition to be completed by early November this year.
GOB said the acquisition would be financed through bank borrowings and internally generated funds.
Property analysts believe the acquisition price for the land, at RM14 per sq ft, to be fair, and would give the company sizeable tracts of land.
They noted that quite a number of developers have projects adjacent to Genting Highlands, including LBS Bina Group Bhd’s Midhills at Genting Permai, OSK Property’s Windmill Upon Hills at Genting Permai.
Analysts added that the acquisition could nudge GOB’s gearing to 0.85 times from 0.58 times as at March 31 assuming that 70%, or RM119.47mil of the total consideration was to be financed via bank borrowings.
For the financial year ended March 31, GOB posted a higher net profit of RM41.58mil compared with RM30.38mil a year ago.
Its revenue rose to RM804.12mil against RM445.11mil previously. GOB has a cash and cash equivalents of RM179.1mil as at March 31.
GOB’s property development division contributed RM742.92mil to the company’s total revenue and is the main source of revenue.