PETALING JAYA: TSH Resources Bhd’s net gearing level is expected to drop to about 0.15 times from 0.45 times following the conclusion of its land disposal in North Kalimantan, Indonesia.

       It was sold at a total disposal consideration of 2,428.8bil rupiahs or RM711.6mil.

       Kenanga Research noted that the disposal consideration of RM711.6m is a premium of 140.7% to the market value ascribed by the valuer and it represents a premium of about RM440.5mil or 162.4% to the audited net book value of the sale land of RM271.1mil.

       However, it also noted that the proposed disposal is categorised as a related party transaction and it is subject to shareholders’ approval.

       “In August 2011, the original cost of investment was only RM181,000.

       Stripping out the net book value of RM271mil, as well as plasma settlement of RM20.5mil and estimated expenses for the proposed disposal of RM19.6mil, TSH is expected to record a one-off gain of RM400.3mil or 29 sen per share and which is expected to be completed by the first quarter of 2023,” Kenanga said.

       “The deal values the plantation land at an indicative enterprise value of RM53,848 per ha, which is deemed to be fair, in our view,” it added.

       TSH is expected to use about RM550mil or 77% of the proceeds to pare down its RM1.1bil in borrowings. Meanwhile it will also use RM45mil or 6.3% of the total proceeds to undertake new planting and replanting of 3,500ha of oil palm estates in Sumatra and Kalimantan from 2023-2024.