Net Pacific Holdings Limited Announces Major Industrial Land Acquisition in China
Strategic Expansion to Boost Production Capacity and Long-Term Competitiveness
Net Pacific Holdings Limited (formerly known as Net Pacific Financial Holdings Limited), a company listed in Singapore, has announced a significant acquisition through its 51%-owned subsidiary, Saint Pearl Travel Products (Guangdong) Co., Ltd. (“Saint Pearl”). This acquisition involves the successful bidding and signing of a contract for the State-Owned Construction Land Use Right for a prime industrial land parcel in Sanjiang Town, Xinhui District, Jiangmen, Guangdong Province, PRC, for a consideration of RMB15,640,800 (approximately HKD17,199,000).
Key Highlights of the Acquisition
- Land Details: The acquired land measures approximately 41.16 mu (27,437 square meters) with a leasehold validity of 50 years, renewable upon expiry. It is zoned specifically for industrial use, aligning with national land use planning.
- Bidding and Valuation: Saint Pearl secured the land at the minimum bid price, which was about 48% of the independent valuation (RMB32.92 million). The bidding deposit paid was RMB3.13 million (about 20% of consideration), which counts towards the total purchase price.
- Completion Timeline and Buyback Provision: The land is scheduled for delivery on 16 December 2025. Saint Pearl must commence construction before 9 June 2026 and complete it by 9 December 2027. There is a provision for extension under certain conditions, and a government buyback option exists if construction is not commenced, offering downside protection.
- Planned Construction: Saint Pearl plans to invest approximately RMB18 million (HKD19.8 million) over two years to construct a 20,000 square meter manufacturing plant and office. Most equipment and facilities will be relocated from the current site, minimizing additional capital expenditure.
- Funding Arrangements: The total funding requirement (land and construction) is RMB33.64 million (HKD36.99 million), to be financed by bank borrowings and a non-secured, non-interest-bearing short-term advance of RMB10 million from Mr Li Rongda, director of Saint Pearl. Directors Mr Li and Mr Ben Lee have provided personal guarantees for bridging facilities and are negotiating long-term mortgages with local banks.
- Undertakings and Downside Protection: Controlling shareholder Mr Ben Lee, the joint venture partner (Jiangmen Limingzhu Technology Co., Ltd.), and Saint Pearl’s directors have provided strong undertakings to offer financial support and cover any losses arising from government-mandated actions or failure to commence construction, further mitigating risk for shareholders.
Strategic Rationale
- Capacity Expansion: The new site allows for increased production capacity and efficiency, addressing the rising trend in OEM/ODM orders and expected demand growth.
- Competitive Edge: The scale and modernity of the new facility are expected to attract higher-value customers and larger orders.
- Cost Savings: Ownership of the site reduces reliance on leased premises, decreases long-term rental costs, and mitigates lease renegotiation risks.
- Attractive Valuation and Risk Mitigation: Winning the bid at a significant discount to market value, combined with buyback provisions and controlling shareholder undertakings, creates room for capital gains and limits downside exposure.
Financial Effects and Shareholder Impact
- Net Tangible Asset (NTA) Per Share: Would rise from HKD0.1301 to HKD0.1340 per share, assuming completion and full drawdown of borrowings for the acquisition and construction.
- Loss Per Share (LPS): Proforma LPS improves from HKD(0.0366) to HKD(0.0328), assuming the acquisition was completed at the start of the last financial year.
- Gearing Ratio: Will increase substantially from 28.79% to 82.87%, reflecting a significant rise in borrowings required to finance the acquisition and construction.
- Transaction Size: The acquisition constitutes a “discloseable transaction” under SGX Catalist Rules, with a relative figure of 58.62% compared to the Company’s market capitalization.
Important Shareholder Considerations & Potential Price-Sensitive Factors
- The acquisition is a significant development, securing a long-term asset at a deep discount, with a substantial planned increase in production capacity.
- The transaction will materially increase the Group’s gearing, but downside risk is mitigated by robust undertakings from the controlling shareholder and joint venture partner.
- The company has clearly outlined its funding strategy and has received personal guarantees from key directors, reducing the risk of funding shortfall.
- Shareholders should monitor for updates on the completion of the acquisition, the drawdown of long-term project loans, and the start of construction. Any delay or failure in execution, or changes in government policy, could impact the company’s financial position and share price.
- The Board has explicitly stated that the acquisition aligns with the Group’s long-term strategy and is in the best interests of shareholders.
Cautionary Note
The acquisition is subject to several conditions, including regulatory approvals, completion of funding arrangements, and execution of the construction project. There is no certainty that the transaction will be completed as planned. Shareholders are urged to exercise caution and consult their financial advisors if in doubt.
Disclaimer
This article is for general information only and does not constitute investment advice. Investors should exercise their own judgment and consult professional advisors before making any investment decisions. The Company will make further announcements as appropriate should there be material developments regarding the acquisition.
