MEDIA Prima Bhd has kept itself busy with a second land transaction in a month.
This time, the media and entertainment group switched from being a “buyer” to a “vendor” with its 98%-owned subsidiary New Straits Times Properties Sdn Bhd planning to dispose a parcel of its leasehold industrial land in Kawasan Perindustrian Bandar Sultan Sulaiman, Port Klang for RM25 mil to sister company Malakoff Corp Bhd.
More precisely, the land will be sold to Malakoff’s business unit, Alam Flora Environmental Solutions Sdn Bhd, for RM25 mil cash with the agreement reached on a willing-buyer willing-seller basis.
By virtue of Media Prima and Malakoff having a common shareholder in tycoon Tan Sri Syed Mokhtar Al-Bukhary, the latest land deal is deemed a related party transaction given Malakoff is an 18.37%-owned associate company of MMC Corp Bhd – the flagship of Syed Mokhtar – who is also a major shareholder of Media Prima holding a 31.9% stake.
Earlier this month, Media Prima said it was paying RM156.4 mil to buy back Balai Berita Bangsar, one of two properties it sold to Permodalan Nasional Bhd (PNB) for RM280 mil in 2018.
The price tag is higher than the RM118.7 mil tag at which Media Prima sold to PNB in 2018.
Unlike the previous transaction, however, the current deal is profitable given the land which measures 23,370 sq metres (with two single-storey detached factory warehouses) was acquired 15 years ago at a cost of RM13.3 mil and has a book value of RM11.7 mil as of end 2020.
According to MIDF Research, the deal is consistent with Media Prima’s plan to dispose properties that are situated in locations deemed not to have immediate development potential.
“The RM25 mil net proceeds will be credited to the Debt Service Reserve Account that is being operated by RHB Bank Bhd,” noted the research house. “The sale of the land is expected to give rise to a one-off net gain of RM12.1 mill to Media Prima.”
This will eventually pare down the group’s borrowings which stood at RM125.5 mil as of end-December 2020 by circa 20% which subsequently leads to a slight reduction in gross gearing ratio to 0.49 times from 0.54 times.
All-in-all, MIDF Research retained its “neutral” rating on Media Prima with an unchanged target price of 64 sen, noting that the company needs more immediate earnings catalysts moving forward.
At 10am, Media Prima was down 1 sen or 2.17% to 45 sen with 606,500 shares traded, thus valuing the company at RM499 mil. – July 16, 2021
