Sunway Bhd’s ’s planned acquisition of a Singapore-based residential estate for S$530mil (about RM1.59bil) is expected to contribute positively to its coffers, moving forward, as the group expands its footprint in the city-state.
Sunway unit Sunway Developments Pte Ltd plans to jointly acquire a private residential property – Brookvale Park in Singapore – with Hoi Hup Realty Pte Ltd.
Both entities have entered into a collective sale and purchase agreement (SPA) with the collective majority owners of Brookvale Park to acquire the property.
Upon completion of the acquisition, the Brookvale Park land will be redeveloped into a new private residential development.
In a filing with Bursa Malaysia yesterday, Sunway pointed out that the Brookvale Park is located on 999-year leasehold land in Clementi. It is currently a 160-unit private residential estate with a land area of 34,654 sq m.
“A proposed joint-venture (JV) company will be set up, in which Hoi Hup, Sunway Developments and SC Wong Pte Ltd will have equity interest in the proportion of 60%:30%:10%.
“The completion of the SPA with Hoi Hup is subject to fulfillment of conditions precedent and authorities’ approval.
“The proposed project is expected to contribute positively to the earnings of the Sunway group from the financial year ending Dec 31, 2019 (FY19) onwards,” it said.
Sunway Developments is a wholly owned subsidiary of Sunway Holdings Sdn Bhd, which is, in turn, a wholly owned subsidiary of Sunway Bhd.
Meanwhile, Hoi Hup is a company incorporated in Singapore and its core business is related to real estate development. On the other hand, SC Wong, which is also incorporated in Singapore, has been primarily involved in investment holding.
With an equity interest of 30% in the JV, Sunway Developments’ cost of investment translates to nearly S$70mil (RM210mil).
Previous news reports said that Brookvale Park was launched for sale last year by tender for a minimum price of S$530mil. The private residential estate, which was built in 1983, is located in a strategic location within the exclusive Sunset Way enclave.
Sunway added that the proposed redevelopment of Brookvale Park is subject to normal development and construction risks.
“However, with the past experience and expertise of Hoi Hup and Sunway Developments in the development and construction of similar projects, this risk could be mitigated,” it said.
None of the directors or substantial shareholders of Sunway have any interest, both directly and indirectly, in the proposed project.
Sunway, which has business interests in a wide range of segments including property development, construction and trading, and manufacturing, will be releasing its financial results for FY17 on Feb 28.
In the first nine months of FY17, the group’s bottom line rose by about 14% year-on-year (y-o-y) to RM455.71mil.
In the same period, its revenue improved by 8.62% y-o-y to RM3.65bil, mainly as a result of higher contribution from most business segments, particularly property investment, construction and trading as well as manufacturing.
However, Sunway’s property development and quarry segment registered a lower topline and earnings on a y-o-y comparison basis.
The decline in its property development’s performance was mainly due to lower sales and progress billings from local projects.
On the other hand, the quarry segment’s lower revenue was attributed to a reduced sales volume for aggregates and premix, and a slightly lower selling price for aggregates.
The Main Market-listed Sunway was unchanged at the close of trading yesterday at RM1.65, with a total of 921,500 shares changed hands.