EDGEPROP. 23RD SEPTEMBER: LFE Corporation Bhd has proposed to diversify into property development by entering into a joint venture (JV) with Aziho Trading Sdn Bhd to develop a housing project in Kuala Muda, Kedah.
The electrical and mechanical engineering service provider said its 60%-owned subsidiary, LFE Development Sdn Bhd (LFEDSB), today inked an unincorporated JV development agreement (JVDA) with Aziho Trading, the landowner, to develop Taman Residensi Mesra Phase 2 on 8.17 hectares with a gross development value of RM111.03 million.
The project, comprising 422 single-storey and 142 double-storey terrace houses, would have a gross development cost of RM86.15 million, LFE said in a filing with Bursa Malaysia on Sept 22.
“Its estimated total gross development profit is approximately RM24.88 million, which translates into an average GDP of approximately RM10.49 million per annum throughout the project tenure (of two-and-a-half years starting the first quarter of 2022),” it said.
Based on this, and assuming that LFEDSB is entitled to fully recognise the gross development profit throughout the project tenure, it said the project was expected to contribute more than 25% of the LFE group’s total net profit or cause a diversion of more than 25% of its net assets moving forward.
LFE said the proposed venture into property development would mitigate the group’s reliance on a single business segment and create an additional source of income stream moving forward.