Bina Puri to acquire more of Ideal Heights

CONSTRUCTION outfit Bina Puri Holdings Bhd is understood to be looking to raise its shareholding in Ideal Heights Properties Sdn Bhd from the existing 12%, a source familiar with the matter tells The Edge.

The plan involves Bina Puri buying more shares to obtain controlling interest of at least 51% through a share-swap exercise. It is understood that Bina Puri has appointed Affin Hwang Investment Bank Bhd as an adviser in the related-party transaction.

Bina Puri is about 16% controlled by Tan Sri Tee Hock Seng and his family. They also control Ideal Heights.

Ideal Heights’ largest shareholder is Tee, who holds a 22.5% stake in the privately held company. Other shareholders of Ideal Heights include Dr Tan Cheng Kiat, Tay Hock Lee and Tee Hock Hin. Some of them are also on the board of Bina Puri or linked to the construction company.

The share consideration will bump up the Tee family’s shareholding in listed Bina Puri. Hence, the family and related parties are understood to be looking to avoid crossing the 33.3% shareholding threshold, which would trigger a general offer.

“Valuations are still being worked out, so we are not exactly sure how much of Ideal Heights that Bina Puri will control,” the source says.

Other than the Tee family, the other substantial shareholders of Bina Puri are private company Jentera Jati Sdn Bhd, which has 8.76%, and Ng Keong Wee, who has just above 6%.

Bina Puri’s share price closed at 41.5 sen last Friday, giving the company a market capitalisation of just over RM100 million. The stock hit a 52-week high of 49 sen in mid-October last year, but lost a quarter of its value this year, hitting a low of 35 sen on May 25.

Nevertheless, Bina Puri’s plan to control Ideal Heights has merits. It could be a main contract and income source. “Ideal Heights has a great development in Kuantan, so it makes sense to put it under the umbrella of the listed company,” the source adds.

Ideal Heights is playing a key role in the reclamation and development of the 500-acre, multibillion ringgit Kuantan Waterfront Resort City in Tanjung Lumpur, about 2km from Kuantan. The main attractions of the project include a water theme park, a marina and yacht facility, a medical and wellness centre and duty-free shopping and premium outlets. There are also residential units comprising houses, floating villas, bungalows and high-rise serviced apartments and condominiums.

In a nutshell, Kuantan Waterfront Resort City could be a catalyst for economic activity in Kuantan town.

Ideal Heights commenced operations in December 1985 and has a decent track record, having successfully built the Bukit Idaman township in Selayang, Taman Villamas in Sungai Buloh, Idaman Villa in Cheras and Taman Puchong Impian 2 in Puchong.

For its financial year ended Dec 31, 2015, Ideal Heights registered an after tax profit of RM868,294 from RM10.32 million in revenue. As at end-2015, the company had current assets of RM38.13 million and non-current assets of RM9.26 million. On the other side of the balance sheet, it had current liabilities of RM25.46 million and non-current liabilities of RM6.69 million.

It is also worth noting that Ideal Heights had RM4.54 million in share capital and an additional RM8.8 million in reserves.

For the six months ended June 30, Bina Puri registered a net profit of RM1.71 million from RM597.07 million in revenue. In the previous corresponding period, its net profit was down by about a third, while revenue was only down 1.28%.

As at June 30, Bina Puri had cash and bank balances of RM48.34 million and fixed deposits of RM7.34 million with licensed banks.

The company had short-term debt commitments of RM381.05 million and long-term borrowings amounting to RM200.46 million. Bina Puri’s shareholders’ funds as at June 30 stood at RM223.69 million.

Bina Puri has an order book of RM2 billion, which should keep the company busy for the next two years or so.

Ideal Heights has undertaken several property development projects, such as the Petrie Villa in Johor Baru, which includes 23 four-storey pool villas and a club house; Main Place Residence in USJ21, which comprises a 33-storey serviced apartment block and a three-story retail podium; Laman Villa @ Mont Kiara North, which comprises 22 link villas and eight condominiums; and The Opus in Kuala Lumpur, which comprises two blocks of 36-storey serviced apartments.

Bina Puri’s projects include Puri Tower in Puchong, Jesselton View @ Hilltop and One Jesselton Condominiums in Kota Kinabalu, Sabah, and Ocean View Residences in Miri, Sarawak.

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This article first appeared in The Edge Malaysia on Oct 3, 2016. Subscribe here for your personal copy.