Citaglobal’s Perlis trade-off

Citaglobal Bhd’s seemingly rushed exit from one of northern Malaysia’s most ambitious infrastructure developments, barely a year after investing in it, deserves scrutiny.

More notable is its decision to surrender the entire stake in exchange for a much smaller equity interest in another loss-making listed firm, whose share price has barely moved in the past year.

The timing is particularly striking, considering that the first phase of the Perlis Inland Port (PIP) commenced operations only in May, while other major components of the development have yet to realise their full commercial potential.

Yet, the proposed disposal is not without financial merit, raising questions over whether Citaglobal is making a prudent decision to reduce investment risks or giving up too much of the project’s future potential.

To understand the implications, it is worth examining how Citaglobal became involved in the development.

In December 2025, Citaglobal completed the acquisition of a 20% stake in Manjaran Sdn Bhd, with the remaining 80% held by Dedap Rimbun Sdn Bhd, which is owned by Datuk Shabaruddin Ibrahim and his family.

Manjaran, through its 80%-owned subsidiary Mutiara Infra Sdn Bhd, is the controlling shareholder of Mutiara Perlis Sdn Bhd, a joint venture between Mutiara Infra (80%) and the Perlis state government via Menteri Besar Inc Perlis (20%).

Mutiara Perlis is the master developer of the Perlis Maritime Corridor or PMC, an integrated logistics development comprising the PIP, the Perlis Sanglang Port and the Perlis Power Hub. The federal government has also provided infrastructure funding through the Northern Corridor Implementation Authority.

In essence, Citaglobal’s 20% stake in Manjaran translates into an effective 12.8% interest in Mutiara Perlis.

However, Citaglobal’s effective interest in Mutiara Perlis is set to shrink from 12.8% to slightly over 1% following its proposed RM50mil disposal of the entire Manjaran stake to Berjaya Property Bhd (BProperty).

Under the arrangement, Citaglobal will receive a 3.39% stake in BProperty, which will in turn own 49% of Manjaran upon completion of its earlier proposed subscription and the latest acquisition.

BProperty reported a wider net loss of RM182.9mil in the financial year ended June 30, 2026.

On Oct 28, BProperty announced that its wholly-owned subsidiary, Berjaya Construction Bhd, is set to undertake design and construction works for the RM1.2bil Sanglang Port development, which carries an initial estimated construction cost of RM675mil.

This positions BProperty to benefit not only from its increased equity interest in the Perlis Maritime Corridor, but also from potential construction earnings as the project progresses.

For Citaglobal, the proposed disposal offers a sizeable gain on an investment held for less than a year, although the financial benefits are not as straightforward as the RM50mil consideration suggests.

Citaglobal agreed to acquire its stake in Manjaran for RM40mil in August 2025, completing the acquisition in December that year. It is now proposing to dispose of the same stake for RM50mil, representing a 25% increase in the agreed transaction value in less than a year.

The disposal is also expected to generate a one-off accounting gain of RM13.39mil, based on the investment’s carrying value of RM36.61mil as at June 30, 2026, although the actual gain will depend on the fair value of the consideration shares and the investment’s carrying value upon completion.

Nevertheless, the proposed disposal presents a mixed picture, offering Citaglobal potential financial benefits and reduced investment risks while raising questions over the value it is surrendering.

For starters, Citaglobal is not receiving a single sen in cash.Instead, the entire RM50mil consideration will be satisfied through the issuance of 178.57 million new BProperty shares at 28 sen apiece.

At a BProperty share price of 25 sen as of Oct 28, the shares Citaglobal is set to receive would have a market value of approximately RM44.64mil, below the headline disposal consideration.

Even so, this would still represent a premium from Citaglobal’s original investment cost.

Responding to questions from StarBiz 7, Citaglobal defended the agreed issue price, pointing to BProperty’s underlying asset value. “At 28 sen per share, the agreed issue price is significantly below BProperty’s reported net asset value of 65 sen per share, providing a substantial discount to its stated book value.”

The company also cautioned against assessing BProperty solely on its recent financial performance and market valuation.

“As a property-based group, BProperty’s earnings can be lumpy due to the timing of property sales and project realisations. Therefore, its current share price may not fully reflect the underlying value of its assets or longer-term potential.”

While Citaglobal stands to dispose of its investment at a gain, the eventual value of the consideration remains exposed to BProperty’s share price performance.

A further decline in the stock could erode the financial benefits, while any attempt to dispose of the sizeable shareholding could place additional pressure on its market price.

Citaglobal acknowledged the risks but said it would adopt a measured approach towards realising the value of its BProperty investment.

“Management will continue to monitor BProperty’s performance and market conditions in determining the appropriate timing and approach to monetising the shares, with the objective of maximising value for Citaglobal’s shareholders.”

More importantly, the proposed disposal raises questions about Citaglobal’s longer-term strategy. The company is surrendering a direct 20% interest in Manjaran, and with it substantial exposure to the PMC, at a relatively early stage of the development.

While PIP has commenced operations, the broader corridor’s future earnings potential has yet to be fully established.

PIP has reportedly handled 100,000 twenty-foot equivalent units (TEUs) of cargo in less than five months since commencing full operations.

Economy Minister Akmal Nasrullah Mohd Nasir has also expressed confidence that the port’s cargo handling volume could reach 180,000 TEUs by year-end. These developments suggest growing commercial activity, although higher cargo volumes do not necessarily translate into immediate profitability for the project’s shareholders.

Nevertheless, there are valid commercial reasons for Citaglobal to consider an exit.

Major infrastructure developments typically require substantial capital commitments, while financial returns may take years to materialise. Remaining invested in Manjaran could, therefore, expose Citaglobal to additional funding requirements, development risks and potential losses.

Indeed, Manjaran recorded a loss attributable to its owners of approximately RM6.99mil in 2025, while Citaglobal recognised a share of losses of RM660,000 for the period up to June 2026.

By disposing of its stake, Citaglobal could reduce its exposure to these risks while retaining a smaller indirect interest in the development through BProperty.

The arrangement may also allow Citaglobal to allocate more resources towards projects where it has greater operational control.

Explaining the rationale behind the transaction, Citaglobal tells StarBiz 7 that the proposed disposal should not be viewed as an outright exit from the development’s future commercial prospects.

“The transaction, therefore, allows Citaglobal to rebalance its investment portfolio while retaining potential upside through its BProperty shareholding.

“Management considers this a strategic balance between capital efficiency, risk management and future growth opportunities, rather than a complete withdrawal from the commercial opportunities associated with the PMC.”

Citaglobal has indicated that it could continue participating in the development as an engineering, procurement, construction and commissioning contractor.

According to the company, this would make the realisation of profits “more certain” compared with retaining an equity interest in the project.

There is merit to this argument, as construction contracts could generate earnings without requiring Citaglobal to bear the same level of long-term investment and funding risks.

However, future contract awards are not guaranteed, and any earnings would depend on the value, profitability and execution of the contracts secured.

Ultimately, Citaglobal’s proposed disposal has both financial merits and strategic drawbacks.