Knusford to ride on interest in Lim Kang Hoo

KUALA LUMPUR (Feb 8): Construction and property developer Knusford Bhd may ride on recent investor interest in companies linked to Datuk Lim Kang Hoo. His name has recently appeared on business news pages for his involvement in certain major corporate exercises as well as projects in Johor, said market observers.

Recently, Lim proposed to inject his and his partner's interests in Duta-Ulu Kelang Expressway (DUKE) into Ekovest Bhd, in which he controls, and he has teamed up with Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ), a Johor state investment arm, to consolidate their holdings in Tebrau Teguh Bhd.

Tebrau Teguh was appointed just last week by the Johor government as the developer for some 167ha of land in Pengerang, the site for Petroliam Nasional Bhd's US$20 billion (RM60 billion) Refinery and Petrochemicals Integrated Development (Rapid).

It is worth noting that Lim and the Sultan of Johor are major shareholders of Knusford, with a joint 30.11% stake held through their common vehicle Aman Setegap Sdn Bhd, according to Knusford's 2010 annual report.

While Tebrau Teguh has got the development rights for the Pengerang land, last Thursday Knusford announced  to Bursa Malaysia the securing of a project in Johor.

Knusford said its 40% associate CBD Development Sdn Bhd has secured a letter from the Johor Economic Planning Unit appointing CBD in principle as the turnkey contractor for "The Wave" project in Johor Bahru and as the master developer for the transformation of Johor Bahru Central District.

The appointments of CBD are subject to it submitting a detailed proposal including business models to the Johor EPU for consideration. Apart from Knusford, other shareholders of CBD are KPRJ and Danga Bay Sdn Bhd with 30% equity interest respectively.

According to Knusford, "The Wave" is for the proposed relocation of the city hawkers to a new building to be known as "1 Malaysia Food Court" and is a component of the proposed transformation plan for Johor Bahru city centre.

Knusford's announcement did not state the value of the transformation project. However, the government did announce in 2010 that it would allocate some RM1.8 billion under the 10th Malaysia Plan to rehabilitate and transform the Johor Bahru city centre. The work is expected to be completed within five to seven years.

It was said that the Johor Bahru city transformation initiatives include repositioning and rebranding of city facilities, upgrade of utilities and social infrastructure and enhancing existing commercial activities.

Knusford's shares have yet to attract interest despite recent attention paid to Lim. The stock closed at RM1.75 last Friday, up five sen in thin trading. At this price, Knusford had a market capitalisation of RM174.38 million, below its shareholders fund of RM234.55 million as at Sept 30, 2011. Its net assets per share was RM2.35.  

The company's net profit for FY09 ended Dec 31 was RM6.8 million and for FY10 RM17.2 million. Earnings multiplied for the nine months ended September 2011, with net profit amounting to RM46.2 million on a revenue of RM211.25 million due to better construction margins.