PETALING JAYA (July 9) – A1 A.K. Koh Group Bhd is strengthening its long-term growth strategy with the proposed acquisition of a 99-year leasehold commercial land parcel in Pekan Puchong Jaya, Selangor, for RM16.73 million. The land will be developed into a new four-storey regional sales and marketing office, replacing the group's existing rented premises and supporting its expanding operations in Malaysia's central region.

The proposed acquisition, announced via Bursa Malaysia, will be undertaken through the group's wholly owned subsidiary, A.K. Koh Enterprise Sdn Bhd, which has entered into a conditional Sale and Purchase Agreement (SPA) with Qualitypack Properties Sdn Bhd.

Strategic Expansion into a Purpose-Built Regional Office

The land is located in Pekan Puchong Jaya, Petaling, Selangor, a well-established commercial area with good accessibility to the Klang Valley.

Key property details include:

• Tenure: 99-year leasehold with approximately 75 years remaining.
• Land size: Approximately 1.01 acres (4,070 sq m).
• Purchase price: RM16.73 million.
• Independent market valuation: RM16.5 million.

The agreed purchase price represents a premium of only RM228,740, or 1.39%, above the independent valuation, which the board considers reasonable given the property's strategic location and suitability for long-term operational needs.

Moving Away from Rental Premises

Currently, A1 operates its central region business from a rented office at Taman Perindustrian OUG, Kuala Lumpur, occupying approximately 4,938 sq ft with a monthly rental of RM10,000.

As the company's revenue has grown steadily over recent years, management believes the existing office no longer provides sufficient space to support future expansion.

The new development is expected to significantly enhance operational capacity while reducing reliance on rented commercial space over the long term.

Planned Four-Storey Commercial Development

A1 intends to develop the land into a purpose-built four-storey commercial building with an estimated gross floor area of approximately 45,260 sq ft.

The new facility will serve as the company's:

• Central region sales office.
• Marketing headquarters.
• Administrative support centre.
• Customer engagement and business development hub.

The larger premises will also provide additional room for future workforce expansion and support the company's broader business growth strategy.

Supporting Business Growth

The acquisition aligns with A1's plan to strengthen its presence in Malaysia's central region.

Management intends to drive future growth through several initiatives, including:

• Expanding into the halal food market.
• Increasing participation in the HoReCa (Hotel, Restaurant and Catering) sector.
• Introducing new food products and brands.
• Acquiring new customers across various market segments.

The board believes owning a strategically located commercial property will provide a stronger operational platform to support these initiatives.

Acquisition Funding Structure

The RM16.73 million acquisition will be financed through a combination of bank borrowings and internal funds.

Funding consists of:

• RM14.85 million term loan from RHB Bank Bhd.
• Remaining balance funded through internally generated funds.

Payment under the Sale and Purchase Agreement is structured in stages:

• 2% earnest deposit (RM334,574.80), already paid.
• 8% balance deposit upon execution of the SPA.
• Remaining 90% payable upon completion of the transaction.

If completion is delayed beyond the agreed timeframe, an automatic one-month extension is available, subject to interest charges on the outstanding balance.

Shareholder and Regulatory Approvals Required

The acquisition remains subject to several conditions, including:

• Approval from A1 shareholders at an Extraordinary General Meeting (EGM).
• Consent from the Selangor State Authority for the transfer of ownership.
• Approval for the creation of a legal charge over the land in favour of the financing bank.

Once these approvals are obtained, the transaction is expected to proceed under the agreed timeline.

Financial Impact

The acquisition will not dilute existing shareholders, as no new shares will be issued.

However, the use of bank financing will increase:

• Total borrowings.
• Finance costs.
• Gearing levels.

Despite this, management believes the long-term operational benefits of owning a dedicated headquarters outweigh the additional financing costs.

Why This Acquisition Matters

Unlike many listed companies acquiring land for residential or mixed-use developments, A1 is purchasing this property primarily for owner occupation rather than property development.

The move demonstrates management's confidence in the company's long-term expansion while investing in operational infrastructure instead of continuing to rely on leased office space.

The acquisition also reflects a broader trend among growing listed companies to secure strategically located commercial properties that can accommodate future business growth and improve operational efficiency.

Key Takeaways

Several important observations can be drawn from this acquisition:

• A1 is investing in long-term operational infrastructure rather than speculative property development.
• Owning a purpose-built regional headquarters provides greater flexibility for future expansion while reducing long-term rental dependence.
• The purchase price is only marginally above the independent valuation, suggesting the acquisition remains financially reasonable.
• The planned four-storey commercial building offers nearly nine times the floor area of the group's current rented office, highlighting management's expectation of continued business growth.
• Expansion into halal products, HoReCa markets and new customer segments indicates that A1 is pursuing broader market diversification beyond its existing customer base.
• Although borrowings will increase due to the acquisition, owning a strategically located commercial asset in Puchong Jaya may provide long-term operational and financial benefits as the business continues to expand.