Lion Posim Bhd (LPB), a petroleum-based goods and building materials distributor, will undertake its flagship property project in Shah Alam, Selangor, with a gross development value (GDV) of RM867 million.
The mixed residential and commercial development will be developed via a joint-venture (JV) with Landasan Lumayan Sdn Bhd, a wholly-owned subsidiary of Menteri Besar Selangor (MBI).
LPB said in a filing with Bursa Malaysia yesterday that its wholly-owned subsidiary Lion Waterfront Sdn Bhd inked a conditional development agreement with Landasan Lumayan on May 18, 2022, to create an unincorporated joint venture to complete the project.
According to the filing, Landasan Lumayan was formed in 2012 to implement the Selangor Maritime Gateway project as part of the Klang River rehabilitation master plan.
LPB said that in conjunction with the proposed unincorporated JV, it is proposing to diversify the existing business of the group and its subsidiaries to include property development. The principal activities of Lion Waterfront, which was incorporated on December 10, 1987, are property investment and property development.
The proposed development will be developed on 10.64 hectares of land in Section 24, which the Selangor government would alienate to Landasan Lumayan.
The land is located along the Sungai Klang embankment and within Section 24's established residential area. The land has a long river frontage and is largely flanked by low and medium-end dwellings, according to the filing.
LPB said the proposed mixed development, according to the preliminary conceptual plan, will have 200 townhouses, 1,106 apartment units, 648 affordable housing units, 16 shop lots, and a clubhouse, developed in stages over the next 10 years.
An independent property consultant had been appointed to undertake a market assessment on the land and analyse the project based on the preliminary conceptual plan, according to the group.
The overall GDV and total gross development cost (including landowner's entitlement) of the project are estimated to be RM867 million and RM651 million, respectively, after considering the market study completed by the property consultant, it said.
According to LPB, the proposed unincorporated JV will require an initial working capital of RM50 million, which will be paid from domestically produced revenues.
"As and when such developed units are sold and sales collection starts, the group expects that the remaining development costs (including the landowner's entitlement) will be self-funded until completion of the project," it said in the filing.
LPB said the development's excellent location with river frontage on the Klang River and easy accessibility via major roads and highways is likely to contribute positively to the group's earnings.
The project will supplement the company's existing businesses, which include the trade and distribution of building materials and steel goods, as well as automobile lubricants and components, it said.
LPB said that, in the future, the group may pursue other property development projects as possibilities emerge.
As a result, the group expects such property development activities to contribute 25 per cent or more of net earnings or result in a diversion of 25 per cent or more of the group's net assets, it said.
LPB recorded a revenue of RM878.2 million for the 18 months ended December 31, 2021, mainly contributed by the building materials and lubricant businesses. Its profit for the 18 months was RM136.72 million. (LPB changed its financial year from June 30 to December 31).