Sand Nisko Capital Bhd (SNCB) plans to carry out its two proposals, which is to diversify into property development, construction and property investment, as well as to develop a housing project in Melaka.
In 2016, there was a joint venture (JV) between SNCB's wholly-owned subsidiary, Len Cheong Resources Sdn Bhd (LCR) and Goldpeace Corp Sdn Bhd (GCSB) to develop a parcel of land the latter owns in Melaka Tengah.
This project would have marked SNCB's entry into the property development industry. However, the JV project encountered delays thus SNCB did not pursue its proposed diversification plans.
In a stock exchange filing yesterday, SNCB said that taking into consideration the progress of the JV project thus far, it has decided to continue with its proposed diversification plans.
As such, SNCB expects that the involvement in the proposed JV and any other construction and property development activities in the future will result in a diversion of more than 25 per cent of the net asset of the group.
The net profits to be generated therefrom is expected to contribute to over 25 per cent of the net profits of the group, it said.
The group noted that its venture into the construction business in fiscal year 2018 has resulted in the revenue, profit and segment assets contributions becoming more significant.
SNCB, formerly Len Cheong Holding Bhd is involved in the manufacturing of and trading in furniture. Through its subsidiary companies it also is engaged in processing of wood components and parts, and trading of furniture/timber/log products.
The group is in the midst of streamlining its business. Last September SNCB announced that it was proposing to dispose of its entire equity interest in its wholly-owned subsidiary, Len Cheong Furniture (LCF) Sdn Bhd to DPS Realthy Sdn Bhd (DPSR) for RM10 million.
SNCB told Bursa Malaysia that this is a related party transaction. Its major shareholder and chairman Datuk Seri Sow Chin Chuan is also a major shareholder and director of DPSR.
LCF owns two properties in Senawang, Negeri Sembilan namely, a single-storey lofty detached factory with an annexed double-storey office block and a double-storey utility block.
It also owns a lofty single-storey detached main factory building and a substation in Seremban.
The market valuation of the Senawang Properties is RM19.87 million as appraised by TA Valuers Sdn Bhd in August 2019.
Melaka project to commence this year
For the housing project in Melaka, the JV will develop 18 units of two-storey semi-detached houses (37 square feet x 70 sq ft) and a unit of electrical substation.
The estimated gross development value (GDV) and gross development cost (GDC), inclusive of landowner’s entitlement, for the project are about RM7.63 million and RM6.11 million respectively, said SNCB.
Melaka-based GCSB's entitlement as land owner is 19 per cent of the GDV, which amounts to RM1.5 million. Therefore, the project is expected to yield an estimated profit of about RM1.52 million to the group.
SNCB said, individual titles of the land were obtained on January 11, 2019, while the building plans approval was obtained on March 25, 2019, which is effective for 12 months.
"However, the building plans are to be amended due to changes in infrastructure and discharge. The amendment for the changes in infrastructure and discharge will be done within six months upon obtaining the developer’s license," said SNCB.
The group said that LCR is in the midst of applying for the developer’s license.
The project is targeted to commence in the third quarter of this year and is expected to be completed within 24 months.
