Gurmakh Singh (2nd from left) at a signing ceremony. The others are (L-R) Wee Thian Song, Chin Hin Group bhd executive chairman Chiau Beng Teik, Chai Voon Sun, Tan Kok, LTKM independent director Kenny Tan Kah Poh and Proven Venture Sdn Bhd director Rahman Ali Abdul Wahab – Photo: Supplied
By Asia Samachar | Malaysia |
A Sikh co-founder of a Malaysian-based electronic manufacturing services (EMS) provider is set to become a substantial shareholder in a public listed company LTKM Bhd in a proposed corporate revamp.
LTKM plans to sell its existing ‘non-profitable’ chicken egg production business and wholly acquire Local Assembly Sdn Bhd (LASB) for RM336 million, to be satisfied by a combination of RM100 million in cash and the issuance of 393.33 million new LTKM shares at an issue price of 60 sen each.
Gurmakh Singh Ajmer Singh has been identified as one of the three co-founders of LASB, where he is also the executive director and general manager. The other two co-founders of LASB are Chai Voon Sun (MD) and Wee Thian Song (executive director and engineering director).
In a statement to the local bourse today (April 8), LTMK said “the objective of the proposals taken as a whole, is for LTKM to divest its existing non-profitable businesses, acquire a new viable and profitable business while at the same time, rectify its non-compliance with the public spread requirement”.
Once completed, LTMK would change its name to to LA Technology Bhd.
In a statement, LTM executive chairman Tan Kok said: “At its core, the proposals seek to reward our shareholders from the proceeds of the disposal of the Company’s existing poultry business while at the same time, allow them to continue participating in the new EMS business following the proposals.”
“The proposed disposal comes amid the challenging operating landscape for the poultry industry brought on by overcapacity, low average selling price of eggs, high raw material prices, difficulty in controlling disease outbreaks in the farms and acute labour shortage. In relation to these challenges, we have also incurred losses in the recent financial years ended 31 March 2020 to 2021 and for the nine-month period ended 31 December 2021. This has affected our ability to pay dividends too.”
Under the proposed acquisition, the vendors have provided a profit guarantee for LASB of a minimum profit after tax (PAT) of RM28 million for the financial year ending 31 December 2022 or not less than an aggregate of RM50 million PAT for both financial years ending 31 December 2022 and 2023. Based on the guaranteed PAT of RM28 million for the financial year ending 31 December 2022, the purchase consideration represents a price to earnings multiple of 12 times, according to the company’s statement.
For Chai Voon Sun, co-founder and Managing Director of Local Assembly, the listing of Local Assembly via LTKM means a realisation of two decades of hardwork for him and his co-founders and a step forward in the company’s journey of growth and expansion.
“This transaction is a major milestone for Local Assembly. We look forward to the next phase of our corporate journey as a listed entity, which will further accelerate our growth as an EMS player, allow us to expand our customer base and product offerings and pursue more opportunities” he said in the statement.
Local Assembly, which started operations in 2000, is a manufacturer of electronic, electrical and plastic injection moulded components, and sub-contract assembler of electrical appliances and equipment. Its principal markets are Malaysia and Singapore. For the financial year ended 31 December 2022, Local Assembly achieved PAT of RM20.06 million on the back of a revenue of RM116.35 million.
The application for the proposals is expected to be submitted to the relevant authorities by the second quarter of 2022. Subject to approvals from relevant parties including Securities Commission, Bursa Securities Malaysia Berhad as well as shareholders of LTKM, the proposals are expected to be completed in the first half of 2023.
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(Asia Samachar, xx 2022)
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