KUALA LUMPUR (Dec 13): Magni-Tech Industries Bhd has decided to close down its 99.64%-owned printing packaging products manufacturing unit,  South Island Packaging (Penang) Sdn Bhd (SIPP), to streamline the group’s operations.

SIPP will cease all manufacturing activities and dispose of its assets except for the factory building and leasehold land, Magni-Tech said in a filing with Bursa Malaysia.

The decision was made following a streak of poor profits before tax by SIPP for FY14 and FY16 at RM182,000 and RM335,000 respectively, as well as a loss in FY15.

The group said that while the use of high-tech print platforms is needed to remain competitive, the cost to replace old machinery and equipment in the print and packaging division is not worth the return.

Magni-Tech said its decision to cease operation of SIPP will cost the group approximately RM2.72 million.

SIPP was acquired by Magni-Tech in February 2000 with a RM9.1 million price tag. It currently constitutes 2.7% of the group’s assets, 2.1% of unaudited revenue and 0.3% PBT for the first six months ended Oct 31, 2016 (6MFY16).

Closure of SIPP’s existing manufacturing business is expected to be completed in 4QFY17, said Magni-Tech.

Shares of Magni-Tech dropped three sen or 0.72% today to close at RM4.11 for a market capitalisation of RM667.2 million.