Tien Wah Press Holdings Berhad Announces Strategic Data Centre Venture in Petaling Jaya

Key Points of the Proposed Venture

• Joint Venture Formation: Lum Chang Tien Wah Property Sdn. Bhd. (“LCTWP”), a joint venture company of Tien Wah Press Holdings Berhad (TWPH) and Kemensah Holdings Pte. Ltd. (a subsidiary of Lum Chang Holdings Limited), has entered into a Venture Agreement with MyTelehaus Sdn. Bhd. (“MYT”) to develop, own, lease, and operate a data centre on a 1.61-acre portion of its land in Petaling Jaya, Selangor, Malaysia.
• TWPH’s Involvement: TWPH is not a direct party to the agreement but participates via its indirect equity interest in LCTWP. The company has not extended any guarantees or financial commitments for the venture.
• Strategic Rationale: The Board sees the data centre development as a viable and attractive opportunity aligned with long-term strategies to optimise land value, driven by increased demand for data centre infrastructure, suitable zoning, and strong power availability in a strategic location.
• Collaboration Benefits: The partnership leverages MYT’s expertise in data centre design, construction, and operations, enabling LCTWP to retain ownership of the land and building while benefiting from MYT’s technical and business network strengths.

Details of the Venture Agreement

• Division of Responsibilities:
  • LCTWP will provide the development land and fund the construction of the data centre’s core and shell.
  • MYT will cover costs related to regulatory approvals, design, fit-out, commissioning, operation, marketing, and leasing of the data centre.
• Lease Structure: LCTWP will lease the completed core and shell of the data centre to MYT for a 30-year term, subject to a formal lease agreement.
• Conditionality: The venture is subject to securing regulatory approvals, agreement on construction and mechanical/electrical contracts, and execution of the lease agreement within the stipulated period.

Revenue Sharing Model

• Revenue from data centre leasing and operations will be split according to capital expenditure contributions in each phase.
• Initially, LCTWP will receive 50% of revenue at start-up, declining to 20% as the facility expands to full capacity. This phased approach is stipulated in the Venture Agreement.

Risk Factors

• Commitment of land for long-term use.
• Risks associated with project execution and construction timing.
• Regulatory and approval risks specific to data centre projects.
• Dependence on MYT’s operational performance.
• Uncertainty in returns due to market demand and operational outcomes.

Funding and Financial Impact

• The venture will be financed via LCTWP’s internal funds, bank borrowings, and potentially shareholder loans.
• TWPH is expected to invest approximately RM15.3 million, representing its portion of the RM115 million shareholder loan commitment for LCTWP.
• No material effect is expected on TWPH’s earnings per share, net assets per share, gearing, share capital, or substantial shareholders’ holdings for the financial year ending 31 December 2025.
• Barring unforeseen circumstances, the venture is anticipated to positively contribute to TWPH Group’s earnings in future financial periods.

Regulatory Approvals

• The venture is dependent on obtaining necessary regulatory and authority approvals by both LCTWP and MYT.

Directors’ and Shareholders’ Interests

• No directors, major shareholders, or connected persons have any direct or indirect interest in the proposed venture.

Implications for Shareholders and Potential Share Price Sensitivity

• This announcement signifies TWPH’s strategic expansion into the high-growth data centre sector, which could be a significant value driver for the Group in the medium to long term.
• While short-term financial impact is expected to be neutral, future earnings uplift from successful execution and operation of the data centre could positively influence share price and investor sentiment.
• Shareholders should monitor progress around regulatory approvals, project execution, and operational performance, as these will be critical for realising the venture’s full potential and could be price sensitive.
• Risks, especially those related to regulatory delays, construction, or underperformance, could affect future returns and should be considered by investors.

Conclusion

The proposed data centre venture marks a strategic move by TWPH’s joint venture entity to harness the rapidly growing demand for digital infrastructure in Malaysia. The partnership with MYT, an experienced operator, and the revenue-sharing model provide long-term earnings potential and asset optimisation for the Group. Investors should take note of the substantial capital commitment and the phased revenue model, which could become material for the Group’s future financial performance.

Disclaimer: This article is for informational purposes only. It is not investment advice and does not constitute an offer or solicitation to buy or sell securities. The information is based on public disclosures and may be subject to change. Investors should consult their financial advisors and review the full terms of the Venture Agreement and related company announcements before making investment decisions.

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