Malaysia-based investment holding company, Techfast Holdings Bhd on Wednesday (6 January) announced its plans to diversify into petroleum product and bunker fuel trading through a 35% acquisition in CCK Petroleum Sdn Bhd.
Techfast said it will be purchasing the stake in CCK from Kuah Choon Ching for MYR 26.25 million (USD 6.5 million) , of which RM16.17 million will be paid in cash and the balance through the issuance of 23,441,860 new Techfast shares at MYR 0.43 per share.
The group stated the purpose of the diversification is to expand Techfast Group’s revenue and profits as well as to reduce the reliance of its financial performance on the manufacturing sector.
At present, Techfast Group is principally engaged in self-clinching fasteners, electronic hardware and precision turned parts. It also produces mould cleaning rubber sheets and LED epoxy encapsulant materials.
Techfast estimates the transaction to contribute 25% or more to its net profits.
In 2019, CCK Petroleum posted a profit after tax of MYR 969,282 for FY 2019, and for FY17 and FY18, it had posted net losses of MYR 115,812 and MYR 379.32 million respectively.
As part of the agreement, Kuah has issued a profit guarantee totaling MYR10 million for CCK Petroleum in FY21 and FY22.
Techfast added it is aware the maritime industry has been affected Covid-19 related lockdowns but feels “the pandemic has underscored the importance of maritime transport as an essential sector for the continued delivery of critical supplies and global trade in time of crisis, during the recovery stage and when resuming normality”.
“Barring any unforeseen circumstances, the Board, having considered the economic and industry outlook, is cautiously optimistic of the future prospects of CCK and the enlarged Techfast Group,” concluded Techfast.
Photo credit: Techfast Holdings Bhd
Published: 7 January, 2021
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