Northeast to acquire two land parcels in Penang for RM16.35m to expand capacity

• Northeast said the move aims to mitigate delays in its factory expansion caused by regulatory requirements. Relocating warehousing operations to the new sites will free up floor space in existing facilities, boosting production capacity across its factories.

KUALA LUMPUR (March 7): Precision component manufacturer Northeast Group Bhd (KL:NE), which debuted on the ACE Market last October, is acquiring two leasehold properties in Seberang Perai Tengah, Penang for RM16.35 million, as part of its plan to accelerate production capacity expansion amid construction delays for its new factory.

For the first property — a 0.607-hectare plot of vacant leasehold land, Northeast said its wholly-owned subsidiary NE Technologies Sdn Bhd will pay RM5.55 million. It plans to build a two-storey warehouse on the site, with construction costs estimated at RM8.1 million.

The second property — a piece of leasehold land which spans 0.538 hectares and comes with an existing 27,155-sq ft warehouse, will be acquired for RM10.8 million. The warehouse, currently leased to WPC Capital Sdn Bhd for RM20,000 per month, provides immediate rental income while supporting Northeast’s storage needs.

The acquisitions will be partially funded by the company’s unutilised initial public offering (IPO) proceeds amounting to RM14.72 million, with the remaining RM1.64 million to be funded through internally generated funds. Northeast had raised RM84.49 million from its IPO in October 2024.

Northeast said the move aims to mitigate delays in its factory expansion caused by regulatory requirements. Relocating warehousing operations to the new sites will free up floor space in existing facilities, boosting production capacity across its factories.

The two parcels of land are located in a strategic location as they are adjacent to the existing factory occupied by NE Technologies. This will ensure minimal disruption to the group’s existing operations and cost savings, the company added.

Despite the property purchases, Northeast said it is still planning to proceed with a revised four-storey factory by 2029, with a lower allocation of RM20 million against RM40 million budgeted previously.

The remaining RM20 million has been reallocated to partially fund the two property acquisitions and the construction of a two-storey warehouse.

The proposed acquisitions are expected to be completed in the fourth quarter of 2025.

Shares of Northeast closed down 0.5 sen or 1.37% to 36 sen on Friday, giving the group a market capitalisation of RM266.40 million. 

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