Wednesday, October 29, 2014

TChong ... Its Segambut Land Worth rm700 mil !!


It is sitting on a pot of gold. The land which houses sits motor assembly plant in Segambut, KL could fetch up to rm700 million on the open market. Its GDV could exceed rm3 billion. There is talk the company is mulling the development or sale of the land. But this will depend on whether it can move its assembly operations in Segambut to either of its two plants in Serendah and Shah Alam.

The sale would give TChong a boost as it is facing declining sales.

The land has good development potential, it is just 400m from GBH’s land, sold in July 2014 to Keladi for rm34.17 million per hectare.

So will TCMH monetize the land and use the cash to expand its motor assembly business?

Speculation about TCMH moving into property development is not new …

Tan Chong undertook a revaluation of its properties in FY2013. This gives it a total revaluation surplus of rm620 million, equivalent to rm0.95 per share. As the revalued properties include those in Malaysia, Vietnam and Laos, it is not known what the figure was for the Segambut land alone.

The 20ha were revalued at rm459 million or rm22.95 million per hectare from a previous book value of rm80 million.

It was also reported that TCMH plans to overhaul its business model to one which is asset light. Besides, the company is looking at ways to rationalize operating costs.

The asset light business model could involve the elimination of some significant capital assets from the balance sheet.

A rethink of its dealership strategy could also be under consideration.

Currently there are no definite plans. As for TCMH’s assembly operations, expects more collaboration on contract assembly between the company and other car marques. The Segambut assembly plant is being used for contract assembly under commercial agreements between TCMH and automotive players Mitsubishi Motors, Fuji Heavy Industries and Renault SAS.

If TCMH wants to consolidate its Segambut and Serendah plants under one roof, it must get the go ahead from its principal Nissan Motor Co Ltd.

If TCMH wished to consolidate two operations (Segambut and Serendah) it has to abide by its agreement with Nissan Motor.

Relocating operations and freeing up the land to unlock value is common in the motor industry.

Where will TCMH move to? Observers see a better chance of the company relocating operations to its Shah Alam rather than its Serendah plant if it wants to unlock the value of its Segambut land.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.