This article first appeared in The Edge Financial Daily, on January 13, 2016.

KUALA LUMPUR: Seacera Group Bhd is eyeing a profit before tax (PBT) guarantee of at least RM75 million spread over three years from the production of dialysis filters once its polysulphone dialyser manufacturing plant in Melaka — the first in Malaysia — starts production in 2017.

The tiles manufacturing, property and construction company yesterday signed a subscription cum shareholders agreement (SSA) with Proligen Sdn Bhd to set up the plant, as part of its plans to diversify into the healthcare business segment.

At the signing ceremony, group managing director Zulkarnin Ariffin said the PBT amount is guaranteed by Proligen, at a maximum production of two million pieces of dialysis filters per annum, which is expected to bring a turnover of RM120 million by end-2018.

Zulkarnin said the SSA involves a subscription of 520,000 shares of RM1 each, at RM5.70 each in Proligen, or a total sum of RM2.96 million, which will be financed through internally generated funds, after which Proligen will effectively be a 51%-owned subsidiary of Seacera.

“We based the subscription price (RM2.96 million) on the exclusivity rights that Proligen has secured from SuisseMed Technologies — a French medical technological company based in Paris/Zurich to produce the dialyser — for Malaysia, as well as the Asian region.

“The valuation is also based on the profit guarantee that they are going to give. They have also secured grants from the Malaysian Investment Development Authority and Unit Peneraju Agenda Bumiputera, which we believe is close to about RM100 million,” Zulkarnin told reporters after the signing ceremony.

In addition, Proligen currently has offtake enquiries in excess of 3.8 million pieces to China, Indonesia and the Middle East.

He added that the total cost of the healthcare venture is US$51 million, whereby 70% to 80% will be funded via bank borrowings, with the balance from internally generated funds.

About 80% of the plant’s expected production will be for overseas market, while the remaining 20% will be supplied to Malaysia’s Ministry of Health (MoH), said Zulkarnin.

“We are currently in talks with MoH to supply our product and based on their indication, there will be an offtake once we can produce this product ... we expect a recurring income from this segment,” Zulkarnin said.