Gamuda Berhad is buying Salak Land Development Sdn Bhd for RM784.3 million in cash.
The company owns 619ha of leasehold agricultural land, which will boost Gamuda’s land bank and also enhance its position in the property development sector.
The land is located in Selangor, next to Expressway Lingkaran Tengah (“ELITE Highway”), accessible via the KLIA interchange.
Gamuda wants to develop it into a comprehensive contemporary township.
The acquisition is expected to be completed on October 2 and to be entirely satisfied in cash, which will be financed by internal funds and/or bank borrowings.
There are almost 80 years left on its lease.
Gamuda Berhad is engaged in engineering & construction, property development and infrastructure concessions businesses.
Salak Land is wholly owned by Salak Park Sdn Bhd which was founded by Datuk Tan Leong Min in the early 1970s, and these days is co-owned Mahajaya Realty Sdn Bhd and Myomni Sdn Bhd.
Investor Central. We keep your investments honest.
1. What happens if Gamuda doesn’t get permission to convert the agricultural land into mixed use?
If you were spending RM784.3 million on a piece of land in the hope of converting it from agricultural use, you would want this certainty going in.
2. Has Gamuda already applied for, or even received, this approval?
3. What fees does or did Gamuda have to pay to get the zoning changed?
4. Why is Salak Park selling what MIDF Research calls its “Crown Jewel”?
If the piece of land is Salak Park’s crown jewel, why is it selling it?
MIDF Research says it would consider the purchase price to be fair if Gamuda was successful in converting it from agricultural to mixed use land.
5. Was an independent valuation carried out?
The disclosure doesn’t say so, so we assume there wasn’t.
If not, why not? It would be prudent to do so.
Maybank Investment Bank says the acquisition value was fair at RM11.8 psf, seeing that asking prices of nearby leasehold land is RM8-18 psf.
But shareholders would like to hear a more definitive assessment of the value.
If there was, what did the independent valuer say the piece of land is actually worth?
6. How will Gamuda finance the acquisition?
It has already said it plans to use cash and debt, but in what proportions?
The company has RM1.3 bln in cash and a low gearing of 0.21x.
But Affin Investment Bank cautions that assuming Gamuda finances the acquisition with debt, a 5per cent interest rate on the purchase price would knock off RM30 million from its FY15 forecast.
7. What is Salak Land’s outstanding net debt?
The transaction price was RM784.3 million, less net debt.
But the disclosure didn’t say how much this was.
This is important, because it will help us understand how Salak Land was managed before Gamuda acquired it.
8. Where else will Gamuda buy land?
The Salak Land parcel amounts to 52per cent of its RM1.5 bln land banking budget.
Where will it spend the rest?
9. How long has Gamuda eyed this piece of land?
Sure, the transaction was done on July 31, but how long did they take to get to this point?
Was the transaction already being discussed on July 14, when Dato’ Ha Tiing Tai exercised 1.26 million employee share options, netting a profit of around RM2.6 million, and Saw Wah Theng exercised 200,000 employee share options, netting a profit of around RM470,000?
10. Why did it take four days to disclose the transaction?
Gamuda said it consummated the deal on Thursday, July 31, but it only disclosed it to the market on the evening of Monday, August 4.
What took it so long?
Incidentally, Reuters data shows 853,900 shares were transacted just before 5pm on July 31, causing the stock to close up 4 cents at RM4.78 for the day.
The company owns 619ha of leasehold agricultural land, which will boost Gamuda’s land bank and also enhance its position in the property development sector.
The land is located in Selangor, next to Expressway Lingkaran Tengah (“ELITE Highway”), accessible via the KLIA interchange.
Gamuda wants to develop it into a comprehensive contemporary township.
The acquisition is expected to be completed on October 2 and to be entirely satisfied in cash, which will be financed by internal funds and/or bank borrowings.
There are almost 80 years left on its lease.
Gamuda Berhad is engaged in engineering & construction, property development and infrastructure concessions businesses.
Salak Land is wholly owned by Salak Park Sdn Bhd which was founded by Datuk Tan Leong Min in the early 1970s, and these days is co-owned Mahajaya Realty Sdn Bhd and Myomni Sdn Bhd.
Investor Central. We keep your investments honest.
1. What happens if Gamuda doesn’t get permission to convert the agricultural land into mixed use?
If you were spending RM784.3 million on a piece of land in the hope of converting it from agricultural use, you would want this certainty going in.
2. Has Gamuda already applied for, or even received, this approval?
3. What fees does or did Gamuda have to pay to get the zoning changed?
4. Why is Salak Park selling what MIDF Research calls its “Crown Jewel”?
If the piece of land is Salak Park’s crown jewel, why is it selling it?
MIDF Research says it would consider the purchase price to be fair if Gamuda was successful in converting it from agricultural to mixed use land.
5. Was an independent valuation carried out?
The disclosure doesn’t say so, so we assume there wasn’t.
If not, why not? It would be prudent to do so.
Maybank Investment Bank says the acquisition value was fair at RM11.8 psf, seeing that asking prices of nearby leasehold land is RM8-18 psf.
But shareholders would like to hear a more definitive assessment of the value.
If there was, what did the independent valuer say the piece of land is actually worth?
6. How will Gamuda finance the acquisition?
It has already said it plans to use cash and debt, but in what proportions?
The company has RM1.3 bln in cash and a low gearing of 0.21x.
But Affin Investment Bank cautions that assuming Gamuda finances the acquisition with debt, a 5per cent interest rate on the purchase price would knock off RM30 million from its FY15 forecast.
7. What is Salak Land’s outstanding net debt?
The transaction price was RM784.3 million, less net debt.
But the disclosure didn’t say how much this was.
This is important, because it will help us understand how Salak Land was managed before Gamuda acquired it.
8. Where else will Gamuda buy land?
The Salak Land parcel amounts to 52per cent of its RM1.5 bln land banking budget.
Where will it spend the rest?
9. How long has Gamuda eyed this piece of land?
Sure, the transaction was done on July 31, but how long did they take to get to this point?
Was the transaction already being discussed on July 14, when Dato’ Ha Tiing Tai exercised 1.26 million employee share options, netting a profit of around RM2.6 million, and Saw Wah Theng exercised 200,000 employee share options, netting a profit of around RM470,000?
10. Why did it take four days to disclose the transaction?
Gamuda said it consummated the deal on Thursday, July 31, but it only disclosed it to the market on the evening of Monday, August 4.
What took it so long?
Incidentally, Reuters data shows 853,900 shares were transacted just before 5pm on July 31, causing the stock to close up 4 cents at RM4.78 for the day.
