Date Announced 12/06/2008

Proposed acquisition of a new wholly-owned subsidiary

Pursuant to paragraph 10.07(a)(In the case of a transaction where the percentage ratio is less than 5%:-) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of Hap Seng Plantations Holdings Berhad [“the Company/Purchaser”] is pleased to announce that the Board has on even date approved of and accordingly, the Company has on even date entered into a conditional sale of shares agreement [“said SSA”] to acquire the entire issued and paid-up share capital of of Bumilaju Construction Sdn Bhd (667412-H) [“Bumilaju”] comprising 1,000,000 ordinary shares of RM1.00 each [“Sale Shares”] at a purchase consideration of Ringgit Malaysia Twenty Seven Million only (RM27,000,000.00) on the terms and conditions contained in the said SSA. Upon completion of the said SSA, the Company will assume a RM15,000,000 liability owing by Bumilaju.

Bumilaju will become a wholly-owned subsidiary of the Company upon completion of the said SSA.

Bumilaju is a private limited company incorporated in Malaysia on 27 September 2004. It has an authorised share capital of RM1,000,000.00 divided into 1,000,000 ordinary shares of RM1.00 each. Bumilaju is principally involved in land development and construction, general trading and plantation of agricultural crops.

Presently, Bumilaju is the beneficial owner of the following two (2) parcels of plantation land fully planted with oil palm of 6 to 7 years of age:-
i) all that parcel of land held under Country Lease No. 225326170, measuring approximately of 403.1 hectares;
ii) all that parcel of land held under country Lease No. 225319013, measuring approximately 323.6 hectares,
both situated at Kampung Datu, District of Kota Marudu, Sabah [the “said Land”].

Bumulaju also has an interest in a land application for 200 acres of land adjoining to the said Land under the Land Application (LA) No. 20-07222044 fully planted with oil palm of 2 to 4 years of age.

The proposed acquisition of Bumilaju is in the ordinary course of business of the Company with the objective of expanding its plantation activities.

To the best of the knowledge of the directors, none of the directors or major shareholders or persons connected to the directors or major shareholders of the Company has any interest, direct or indirect, in the Proposed Acquisition.

C c: Securities Commission




analysis by author

estimate book value of land: 27m + assuming debt by 15m = 42m
discounted value of immature land concern over the future development expenditure may accur: 200/2.47 x RM3500 = RM283400

total land in ha: 403.1 + 323.6 + 200/2.47 = 807.67ha

EV/ha = (42m+RM283400) / 807.67
EV/ha = RM52350

conclusion
estimate acquisition P/E is 8 and is not compelling,becasue this is offset by transparency of information.