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PETALING JAYA (July 28): Oriental Interest Bhd (OIB) is proposing to acquire the entire equity interest in two motorcycle hire purchase financing and retail businesses for RM280 million in a related-party transaction, marking the property developer's diversification into motorcycle financing and retail operations.
In its Bursa Malaysia filing on Monday, the company said that the proposed acquisition involves 100% of Chin Hin (Jitra) Sdn Bhd (CHJSB) and 100% of CHJ Motor Holdings Sdn Bhd (CMHSB) from LLSB 1980 Holdings Sdn Bhd, with the entire consideration to be satisfied through the issuance of new shares and redeemable non-convertible preference shares (RPS), without any cash outlay.
Transaction broadens business portfolio
CHJSB operates a motorcycle hire purchase financing and moneylending business, while CMHSB is the holding company of a group involved in motorcycle retailing, spare parts distribution, repair services and insurance agency operations.
Under the conditional share sale and purchase agreement signed on Monday, OIB will issue 76.92 million new ordinary shares at RM1.30 each, valued at RM100 million, together with 180 million RPS at RM1 each, valued at RM180 million, bringing the total consideration to RM280 million.
The proposal constitutes a related-party transaction because LLSB, which owns the target companies, is also a 5.08% shareholder of OIB and forms part of the same ownership group as LK Labuan Foundation, OIB's ultimate controlling shareholder with an aggregate 66.24% indirect interest in the company. The transaction therefore requires approval from OIB's non-interested shareholders at an extraordinary general meeting.
OIB said the acquisition would broaden its earnings base beyond its existing businesses in property development, construction, hospitality and oil palm cultivation by adding established operations with recurring income from motorcycle financing and retail activities.
Profitable businesses with established earnings
The proposed consideration falls within the independent valuation range of RM234.31 million to RM297.77 million for the two target companies.
The businesses being acquired generated aggregate revenue of RM263.82 million and aggregate profit after tax (PAT) of RM19.35 million for the financial year ended Aug 31, 2025.
For the six months ended Feb 28, aggregate revenue rose to RM134.65 million from RM129.39 million a year earlier, while aggregate PAT increased 38.6% to RM16.17 million from RM11.67 million, equivalent to 83.6% of its FY2025 full-year earnings.
Property earnings soften amid lower billings
Separately, OIB's latest quarterly results showed weaker year-on-year earnings as lower progress billings from its property development segment weighed on performance.
For the nine months ended May 31, revenue declined 20% to RM501.12 million from RM626.28 million, while profit before tax fell 27% to RM106.89 million from RM146.83 million. The group attributed the weaker performance mainly to lower progress billings from its property development business, although its general construction segment recorded improved margins through better cost management.
Financial effects and approvals
On a pro forma basis, the proposed acquisition is expected to enlarge OIB's issued share capital to 690.56 million shares from 613.63 million shares. Net assets per share would ease to RM1.51 from RM1.54, while net gearing would increase to 0.33 times from 0.17 times under the proposed transaction, reflecting the accounting treatment of the RPS.
The proposal is not expected to trigger a mandatory general offer under the Malaysian Code on Take-Overs and Mergers, while OIB is expected to continue complying with Bursa Malaysia's minimum public shareholding spread requirement upon completion.
The acquisition is expected to be completed in the fourth quarter of 2026, subject to Bursa Malaysia's approval for the listing of the new shares, other relevant regulatory approvals and approval from OIB's non-interested shareholders.
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