Sino Hua-An to exit coke business via disposal of company for RM55m

KUALA LUMPUR (Nov 11): Sino Hua-An International Bhd (SHIB) has proposed to dispose of PIPO Overseas Ltd for 88 million yuan (RM54.95 million), which will be used to partially settle an outstanding amount in relation to the group’s acquisition of Touchpoint International Sdn Bhd.

PIPO owns China-based Yehua, which is involved in the manufacturing and sale of metallurgical coke and other related byproducts. SHIB had initially invested RM800 million in PIPO on May 8, 2006.

“Over the past three financial years, the profit after tax of the coke business had decreased significantly from RM82.78 million in FY17 to a loss of RM181.96 million in FY19. The net profit margin of the coke business had been shrinking over the past three financial years, from a high of 9.28% in FY17 to -23.26% in FY19.

“The coke industry has been declining over the years largely due to the subdued domestic demand stemming from the implementation of the supply side structural reforms and environmental policies,” SHIB said in a filing with Bursa Malaysia.

Of the proceeds to be raised, SHIB said RM30 million will go towards the partial settlement of the purchase consideration owed to vendors of Touchpoint, while RM23.75 million will be used to partially pay the purchase consideration to Wavetree PLT for intellectual property rights.

The group said its focus, going forward, would be on its remaining businesses in the technology and food and beverage segments, with the group to continuously seek out viable ventures including strategic investments, joint ventures and mergers and acquisitions.

The disposal of PIPO is expected to be completed by the first quarter of 2021, said SHIB.

It added that the disposal is expected to generate an estimated proforma one-off gain on disposal of about RM46 million for the group.

Sino Hua-An's share price closed one sen or 10% higher at 11 sen, bringing its market capitalisation to RM144.35 million.