This translates into a dividend per share of about 18 sen based on the company’s 500.74 million shares in issue (net of 13.06 million treasury shares), said Sarawak’s leading property developer as it provided details on how the proceeds from the land sale would be used in a filing with Bursa Malaysia on Thursday.
Naim said the cash dividend is to reward shareholders for their investment and continued support of the group. Naim shares finished 6 sen higher at 88 sen last Thursday.
Wholly-owned subsidiary Petrochemical Hub Sdn Bhd (PHSB) inked a sales and purchase agreement (SPA) with Sarawak Economic Development Corp (SEDC) on July 17 to dispose of 405.6 hectares in Kidurong Industrial Estate for RM340mil cash.
Last Thursday, PHSB entered into a supplementary agreement with SEDC to amend and vary the terms of the SPA so as to cater for the inclusion of new provisions in relation to the requirement for Naim to obtain the approval of its shareholders as a condition precedent to the completion of the SPA.
The proposed disposal is expected to be completed in the fourth quarter of 2020 (4Q20).
Naim is expected to make a gain of RM110.17mil from the land disposal. The disposal consideration represents a premium of RM153.17mil (81.98%) to Naim’s cost of investment in the said land of RM186.83mil.
The company said the bulk of the proceeds or RM117mil would be used for repayment of existing bank borrowings, which is expected to result in annual interest cost saving of about RM5.3mil based on the group’s weighted average interest rate of about 4.53% as at June 30,2020.
As at Dec 31,2019, Naim group’s total borrowings stood at RM483.5mil. This will be reduced to RM366.5mil after the partial repayment and the gearing will be reduced to 0.27 times from 0.36 times.
Naim intends to set aside RM75mil of the sale proceeds as working capital for the group’s ongoing and future property development projects, RM15mil for capital investment and the balanced RM43mil as estimated expenses in relation to the land disposal.
The ongoing projects include Kuching Paragon, which comprises two condominium towers called Sapphire on The Park with gross development value (GDV) of RM170mil. The two towers are now about 64% and 38% completed and scheduled to be completed by 1Q21. A third tower was completed earlier.
The other ongoing project is in Miri Southlake Permyjaya, which comprises the development of landed affordable and medium-priced residential houses with an estimated GDV of RM164mil.
These new homes are in various stages of construction and are expected to be completed by 2Q22.
On future projects, Naim said it planned to build 500 units of affordable and medium-priced houses in Miri, Kuching and Bintulu over the next two years, with an indicative GDV of RM185mil. However, details of these projects have yet to be finalised at this juncture.
On the RM15mil allocation for capital investment, Naim said it would be utilised to fund the group’s proposed investment in an industrialised building system (IBS) plant in Miri.
“The total estimated investment costs, which consist of, inter-alia, acquisition of land, construction of factory as well as acquisition of the IBS plant and machineries, are approximately RM30mil.
“The proposed investment is part of the group’s long-term plan to accelerate the development of affordable houses in major towns of Sarawak as the construction period is expected to be shortened with the IBS technology in place, ” it added.
Naim group managing director Datuk Hasmi Hasan told StarBiz recently that the company would use technology from an established Chinese IBS manufacturer in setting up the plant, which is expected to be operational early next year.
