ACQUISITION OF 50.8% STAKE IN CHIN HIN GROUP PROPERTY BERHAD
Chin Hin Group Berhad (Chin Hin) is adding a new subsidiary to its existing group of companies. It had earlier today announced completion of its acquisition of a 50.8% stake in Chin Hin Group Property Berhad (CHGP) vide its bourse filing, thereby making CHGP the subsidiary of Chin Hin. CHGP will be the third public listed company to be included in Chin Hin conglomerate, together with Solarvest Holdings Berhad and Signature International Berhad.
Chin Hin group of companies is principally an integrated building materials manufacturer and distributor. Therefore, the acquisition of CHGP will enable Chin Hin’s business to diversify into and tap onto the property development sector, i.e.: a realm where most of the Chin Hin customers are currently hoovering at. This is also in congruent with Chin Hin group managing director, Mr. Chiau Haw Choon’s aspiration of expanding Chin Hin into a diversified conglomerate, instead of being a company that is focusing on one particular business.
Mr. Chiau’s expansionary approach can also be traced in CHGP. His Midas touch was proven in year 2017 when CHGP (back then by the name of Boon Koon Group Berhad) diversified into property development from its then existing business of manufacturing of rebuilt commercial vehicles. Such diversification had successfully turned CHGP into a profitable company vis-à-vis its profit track record that had been in the red for the past five consecutive financial years prior thereto. Following the success of the turnaround plan, CHGP adopted its current name some time in 2018.
CHGP is currently on an acquisition spree in term of acquisition of lands to further enhance its land bank for further development with an estimated gross development value of RM4 billion and acquisition of potential company in the construction or development related industry to boost CHGP’s profitability. The latter includes CHGP’s proposal to acquire a 65% equity interest in construction firm Kayangan Kemas Sdn. Bhd., which is a Grade 7 contractor registered with Construction Industry Development Board. Upon completion of the aforesaid acquisition, CHGP will diversify its business activities to include that of construction business to supplement its existing property development business.
Premising upon the ongoing expansionary effort undertaken by CHGP, the imminent recovery of the real estate sector and barring any unforeseen circumstances, the management of Chin Hin postulates that CHGP will record a profit of over RM25 million in the upcoming financial year base on CHGP’s current order book and project pipeline. Chin Hin’s stake in CHGP will allow Chin Hin to consolidate approximately RM12.5 million worth of CHGP’s profit which will contribute substantially to Chin Hin’s profit base. In amplification, the management of Chin Hin also foresees synergetic benefits emanating from the acquisition as Chin Hin and CHGP (coupled with the proposed acquisition of Kayangan Kemas Sdn. Bhd.) are essentially operating in and servicing the same industry, i.e. the real estate industry. This will in turn boost potential future growth for both Chin Hin and CHGP. As such, Chin Hin is confident that its investment of strategic stakes in CHGP will be earning accretive, which in turn, will contribute positively to the long-term future earnings and earnings per share of Chin Hin.
