FOLLOWING the announcement of a series of proposals with a combined acquisition value of RM157.6mil by Lim Seong Hai Capital Bhd (LSH Capital) after its first annual general meeting on March 28, the company’s shares saw a surge of 19% to 50 sen when it resumed trading on March 29.
Its share value has doubled since its debut on the LEAP Market on July 30, 2021, when it opened at 26 sen.
LSH Capital’s shares closed at 42 sen on March 25 and was suspended on March 28 due to the pending release of a very material announcement.
Upon completion of the proposals, LSH Capital will have an expanded secured construction orderbook amounting to RM1.1bil in aggregate, with an overall outstanding orderbook of RM782mil.
LSH Capital’s portfolio will carry property development projects with a gross development value (GDV) of RM1.59bil which is expected to provide earning visibility until 2026.
On top of that, LSH Capital is also involved in construction and property development projects amounting to RM2.7bil via the BEST Framework collaboration, which generally enables the company to earn a certain portion of fees.
The company is also seeking shareholders’ approval to diversify the principal activities of the company and its subsidiaries by including property development and construction activities.
This is in line with the company’s plan for an upstream integration expansion into property development and to further strengthen its construction business as it expects these businesses to contribute more than 25% of the group’s net profit.
Acquisition of Astana Setia
In addition, LSH Capital announced that the company entered into a share sale agreement with Lim Seong Hai Resources Sdn Bhd (LSH Resources) and the vendors of Astana Setia Sdn Bhd through a bourse filing with Bursa Malaysia for the acquisition 3,750,000 ordinary shares or 100% of the equity interest in Astana Setia.
The purchase consideration of RM95mil is to be satisfied by the issuance of 211,111,111 new ordinary shares in LSH Capital at an issue price of 45 sen per share.
Astana Setia has an existing RM395.9mil GDV for its flagship project Residensi Laman Segar Hijau (LSH Segar) at Taman Segar in Cheras, Kuala Lumpur.
The company said LSH Segar has secured a 100% uptake under the RUMAWIP affordable housing scheme and a 70% uptake for the open units. According to the group, Astana Setia has an external construction order book of RM390.81mil, whereby RM146.82mil is still outstanding.
LSH Capital entered a conditional assets exchange agreement with Lim Seong Hai Ventures Sdn Bhd (LSH Ventures) for an exchange consideration of three properties and land across Kuala Lumpur, Selangor and Johor Baru with a combined value of RM8.14mil.
This is to be satisfied by the issuance of 18,088,888 new ordinary shares in LSH Capital at an issue price of 45 sen per share.
LSH Capital also entered a conditional debt settlement cum share subscription agreement with LSH Resources, LSH Ventures and directors of LSH Ventures.
The company has agreed to settle LSH Ventures’ debt of RM54.5mil owing to the directors of LSH Ventures. The company plans to settle the debt by issuing and allotting 121,114,916 LSH Capital shares to LSH Resources at an issue price of 45 sen per share. The deal will also see LSH Capital subscribe to 9.9 million shares in LSH Ventures.
“Parties have mutually agreed and undertake that the LSH Ventures Debt will be settled by no later by July 31, 2022,” it said in the bourse filing.
Upon debt settlement, LSH Ventures will owe LSH Capital a sum of RM54.5mil.
The new debt is to be settled by issuance and allotment of 9.9 million new ordinary shares in LSH Ventures to LSH Capital. This represents 99% of the enlarged share capital of LSH Ventures at the subscription amount of RM15.76mil.
The balance new debt of RM38.74mil shall continue to sit in the books of LSH Ventures, unless the company demands repayment of the balance of the new debt.
“Upon completion, LSH Capital will have 93.75% 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 11.85-acre land in Sungai Besi with an estimated GDV of RM1.19bil,” it added in a statement.BEST Framework
The company noted it has implemented the BEST Framework in building and infrastructure projects in several states and now seeks to repeat its success in the LSH Segar project and Lake Side Homes project.
With the BEST Framework to transform the core foundation of the construction industry, LSH Capital will also be able to achieve a significant involvement in the full supply chains in the construction industry.
“The BEST Framework supports both projects and clients via the Blue Ocean Strategy to secure sales and contracts; enhancement solutions for finance in cash flow planning; sustainability, made affordable for business policymaking, as well as transformation and innovation in engineering solutions and project execution,” it said in a statement.
The company announced its final dividend of 66 sen per share for the financial year 2021.
“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 Sept 30, 2021 (FY9/21) and dividends of RM2.34mil, to meet the 30% benchmark set by the group,” said LSH Capital non-executive chairman Tan Sri Lim Keng Cheng.
Moving forward, the company has its sights on other property projects across parts of Klang Valley.
“This includes Sentul Ria Development in Sentul, the LSH Tower in Taman Tasik Titiwangsa, and the LSH Titiwangsa along Jalan Pahang in Kuala Lumpur, which are currently owned by Lim Seong Hai Holdings Sdn Bhd – the ultimate holding company of LSH Capital,” the company said.
In a separate bourse filling with Bursa Malaysia, the company announced it entered into a subscription agreement with Datuk Seri Mohd Noor Yaccob, independent non-executive director of LSH Capital.
The proposed subscription entails the subscription of one million shares by Mohd Noor, representing 0.28% of the existing total number LSH Capital shares as at March 25, for a total cash consideration of RM420,000 which is equivalent to 42 sen per share.