KUALA LUMPUR (Jan 30): Sarawak Consolidated Industries Bhd (SCIB) deems the RM21.62 million cash it plans to fork out for five leasehold plots in Demak Laut Industrial Park in Kuching, Sarawak, as “fair and reasonable”, after taking into account the prices of comparable properties in the same location.

It said this in response to Bursa Malaysia Securities’ query on how it could be satisfied with the price it has to pay for the parcels, measuring a total of 8.85ha (hectares), given that no valuation was carried out and the price was fixed by the seller — the Land and Survey Department of Sarawak.

According to SCIB, it had conducted a valuation on another parcel of 10-acre leasehold land in the industrial park back in September 2023.

“The land Lot 1166 (the 10-acre leasehold land) was valued at RM1.35 million per acre (or RM31 per sq ft), which is higher than the rate offered by the [Sarawak] state government of approximately RM988,244 per acre (or RM22.69 per sq ft),” SCIB said in a bourse filing on Tuesday.

“Considering the above, the board is satisfied that the purchase consideration is fair and reasonable,” it said.

Based on SCIB’s valuation on the comparative plot and back-of-the-envelope calculations, the land is cheaper by about 26.8%.

The group had announced last Friday (Jan 26) that it is buying the plots, for which it will pay for in five yearly cash instalments, to build a factory. It then plans to relocate its current factory in the Pending Industrial Estate to this new site, which would allow it to increase its production capacity by about 30%.

It expects to begin construction of the new factory in 2Q2024 and complete it by 1Q2025 — about a year after it announced the plots’ acquisition — for operations to kick off in 2Q2025.

Bursa also quizzed SCIB on why the Land and Survey Department of Sarawak would exempt the group from having to pay the fourth and fifth instalment payments for the land — RM7.44 million in total or 34.4% of the total price tag — in the event the factory is completed within three years.

SCIB, however, said it has no authority to respond on behalf of the department and the Sarawak state government.

However, it viewed the exemption “as an encouragement for industry players who intend to relocate their manufacturing operations for capacity expansion”.

SCIB first announced that it was in talks for the land buy on Jan 17, when it was issued an unusual market activity (UMA) query from the bourse regulator, as its counter was one of those affected by a wave of sell-offs, as brokers tightened margin trading on certain counters.

Shares in SCIB ended 4.5 sen or 10.98% lower at 36.5 sen on Tuesday, valuing the company at RM231.09 million. Year to date, the stock has lost 61.58%.