Chin Hin to dispose of industrial properties for RM19mil

KUALA LUMPUR: Chin Hin Group Property Bhd (CHGP) has signed a sale and purchase agreement (SPA) with Miroad Rubber Industries Sdn Bhd (MRISB) for the disposal of two freehold industrial plots in Johor for RM19.3mil in cash.

The transaction involves Lot 240, a 1.35ha parcel of vacant land, and Lot 44506, an 0.89-ha parcel with a 14-year-old detached workshop and office annex. Both sites are located along Jalan Kangkar Tebrau, Kampung Kangkar Tebrau.

According to CHGP, the land had originally been acquired for RM6.76mil in 2012 and was valued at RM28.8mil in its 2024 financial statements. The disposal price, which is significantly lower than valuation, reflects site constraints arising from a high-voltage pylon right of way endorsed on the titles.

“The disposal price of RM19.3mil was determined following a series of negotiations between the company and purchaser.

“The agreed price reflects the current condition of the properties which is near to high-voltage pylon. Given these constraints the disposal price is considered as reasonable,” CHGP said in its filing with Bursa Malaysia yesterday.

The group added that the properties had long been identified for sale due to the limitations posed by the Tenaga Nasional Bhd right of way, which cut across part of the land in 2018.

“The properties were not suitable for development. Since then, the company has identified the properties for sale,” the announcement noted.

Proceeds from the disposal will be used to settle borrowings, fund working capital and cover disposal expenses.

Of the RM19.3mil, RM10mil will go towards debt repayment, while RM7.6mil is earmarked for working capital, including RM5.1mil in advances to subsidiaries for operating expenses and RM2.5mil for salary payments.

The remaining RM1.7mil will cover real property gains tax and related costs.

Despite strengthening liquidity, the transaction will result in a loss of about RM9mil based on the latest book value.

Pro forma calculations show group profit after tax would have been reduced to RM16.7mil from RM26.1mil if the disposal had taken effect in the 2024 financial year.

Earnings per share would have dropped to 1.26 sen, compared with 3.94 sen previously.

On its balance sheet, CHGP expects total equity to fall to RM401mil from RM410mil, while gearing is projected to edge up to 1.02 times from one time.

The disposal, however, will not affect share capital, major shareholder stakes, or trigger Practice Note 17 issues, and is also not subject to shareholder or regulatory approvals.

The SPA requires CHGP to complete an amalgamation and conversion exercise, consolidating the two plots into a single title with land use changed from vehicle storage to warehousing.

The condition must be fulfilled by June 30 2026, which is also the expected completion date for the disposal.

Should conditions not be met, either party can terminate the agreement with refund provisions in place.

MRISB, incorporated in 2003, is principally involved in the manufacture and trade of recycled rubber products.

Its directors are Be Boon Lee and Seow Pong Chee, the latter holding a 96% stake.

CHGP said the disposal was in the best interest of the company, allowing it to monetise a non-core asset and improve its financial position.

“The proposed disposal allows the company to monetise a non-core asset, improve cash flow, and strengthen its financial position through loan repayment and working capital support,” it stated.

Barring unforeseen circumstances, the disposal is targeted to be completed by mid-2026.