BHS Industries buys RM15.6m Cheras property to save rental cost

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KUALA LUMPUR (Dec 31): BHS Industries Bhd is acquiring a 7,356 sq m piece of leasehold property in Cheras Jaya, Selangor for RM15.6 million, which will enable the printing group to save a total rental of RM39,500 per month.

In a filing with Bursa Malaysia, BHS said its wholly-owned subsidiary BHS Book Printing Sdn Bhd (BBP) today signed a sale and purchase agreement (SPA) with Makmur Malaya Sdn Bhd for the proposed acquisition.

The sale and purchase of the property is conditional upon the purchaser obtaining the state authority’s consent, but BHS expects to complete the transaction within four months from the date of the SPA.

The property, which is currently vacant, has a 99-year lease which expires on Dec 30, 2098.

BHS said the proposed acquisition will be financed via internal funds and/or bank borrowings, the breakdown of which will be decided by the management of BHS and BBP.

BHS said the proposed acquisition would enable it to save RM39,500 per month as the amortisation cost for the leased property is expected to be RM15,500 a month, based on the remaining unexpired lease term of 84 years.

The group is currently operating its business activities from a rented factory lots located at nearby Bersatu Industrial Park in Cheras Jaya, which comes with a monthly rental of about RM55,000.

“The investment in a factory would enable the company to enjoy the rise in property price in future and at the same time to provide a fixed place for the company to plan its business without the burden of facing the risk of discontinuance of tenancy or increase in rental,” said BHS.

"The acquisition would also enable the company and BBP to plan the production flow in a more orderly and efficient manner which would result in higher productivity in the business operation," it added. 

BHS’ counter closed up 5 sen or 2.25% at RM2.27 today, giving it a market capitalisation of RM170.05 million.