DFCity Group Bhd (formerly known as Hock Heng Stone Industries Bhd) will undertake an industrial development in Klang, Selangor in a bid to enhance its earnings stream via its property development segment.

The company will develop the project in a joint venture (JV) with the landowner, TL Group Resources Sdn Bhd, it said in a filing with Bursa Malaysia.

DFCity said its wholly-owned subsidiary Hock Heng Realty Sdn Bhd had on August 2, 2021, entered into a Joint Venture Agreement (JVA) with TL Group to develop the land with 21 factory lots and infrastructure.

The company said it will obtain the development plans for the project, approved by the relevant authorities, and a bridging loan facility to finance it

On the rationale of the JV, DFCity said that with this project, the company hoped to expand its property development to other parts of Malaysia.

It said the JVA comes as a timely opportunity for the company to generate revenue for its property development segment as it is not required to commit any upfront cost to acquire the land for the project.

Further, the company said it can share the development risks with the landowner and contribute its existing skills and expertise in the property development areas to undertake the project.

"The Board is of the view that the prospects of the project are favourable after conducting an internal feasibility, given the strategic location of the land, product offerings, and its pricing strategy," it said.

The filing showed that the total consideration payable by DFCity to TL Group shall be the sum of RM23.84 million (land cost) to be payable within thirty-six months from the completion of the proposed development, and the sum equivalent to 50 per centum of the balance profit.

DFCity said TL Group had agreed for the land cost of an equivalent amount to be utilised and set off against the purchase price for the landowner's units up to RM20 million (contra sum).