According to an exclusive report by 9Shares and The Edge, Yong Tai is on the brink of successfully selling its Courtyard by Marriott four-star hotel in Malacca. The hotel is expected to fetch between RM160 million and RM170 million. This sale is in its final stages, with the buyer believed to be a major local logistics company, speculated to be the family-controlled Southeast Logistics, a leading logistics and warehouse system group in Malaysia.

For information, Yong Tai’s current market capitalisation is approximately RM134.0 million.

Game Changer for Yong Tai Shareholders

The sale of the Courtyard by Marriott hotel could significantly enhance Yong Tai’s financial standing. As of March 31, Yong Tai had a total debt of RM169.65 million and cash reserves of RM7.5 million. The anticipated proceeds from the hotel sale would considerably reduce the company’s debt burden and improve liquidity.

A little bit of background of the company.

Yong Tai, a property development group, launched the “Encore Melaka’’ tourism project five years ago. However, the project faced setbacks due to the COVID-19 pandemic. The company reported a net loss of RM346.67 million in 2022, which was reduced to RM21.67 million in the 2023 fiscal year. In the first nine months of the 2024 fiscal year, the net loss further decreased to RM6.09 million. The financial turnaround is attributed to the return of Dato’ Wira Boo Kuang Loon as CEO, who has steered the company back towards stability.

Asset Sales Expected to Go Through

The Courtyard by Marriott hotel, with 248 rooms, has been operational since April last year and achieved a 65% occupancy rate in its first year. This operational success reflects the property’s high potential and market demand. Furthermore, the “Encore Melaka” show has resumed operations, attracting significant Chinese tourist traffic due to Malaysia’s visa-free entry policy for Chinese tourists. This resurgence in tourism is expected to contribute positively to Yong Tai’s revenue and growth prospects.

In conclusion, the strategic sale of a high-value asset, improving financial health, recovery from pandemic-induced losses, successful operations, and active market trading make Yong Tai Berhad an attractive investment prospect. The company’s efforts to stabilise and grow amidst challenging circumstances demonstrate its resilience and potential for future growth.