KUALA LUMPUR (July 14): Asia Poly Holdings Bhd is acquiring 120,000 unit shares or 30% equity interest in FDL Technology Sdn Bhd (FDLTSB) for RM2.4 million, paving the way for the company to diversify into the information technology (IT) industry.
In a filing with Bursa Malaysia today, Asia Poly (fundamental: 0.55; valuation: 0.5) said the proposed acquisition will enable it to diversify its sources of income as well as to venture into IT business.
"ICT will continue to be a key focus for Malaysia and is expected to gain greater momentum driven by the enhancing adoption of ICT.
"As such, e-commerce demand is predicted to be on the uptrend and FDLTSB is well equipped to deliver the e-commerce fulfillment.
"The Board believed that the prospects of FDLTSB are positive in view of FDLTSB's business strategy to continue [to] grow its ICT products and services in anticipation of the development of the ICT industry in Malaysia," it added.
Asia Poly has entered into a sale and purchase agreement with FDLTSB's shareholders Tan Tian Sin, Zakaria Jusoh and Then Hui Chan for the shares acquisition deal.
It said the RM2.4 million will be funded entirely by the company's internal generated fund.
According to its filing, the vendors have jointly guaranteed that FDLTSB shall achieve a profit after tax of no less than RM2.5 million for the financial year ending Dec 31, 2016 (FY16) and RM3.5 million for FY17.
In the event that FDLTSB fails its profit target, Asia Poly said the vendors shall make payment within 14 business days of such demand in equal proportions, the shortfall between the actual profits after tax for the said financial years.
FDLTSB was incorporated in Malaysia on Oct 2, 2013 as a private limited company. It is currently in the business of provisions of end-to-end e-commerce supply chain solutions on an online to offline platform to enhance competitive advantages for domestic and international companies.
The company's directors are Tan and Then. They are also shareholders in the company with a 29.99% and a 40% stake respectively.
Following the acquisition, Tan's shareholdings will drop to 19.9% from 29.99% while Zakaria's will reduce to 20% from 30% and Then will still control a 30% stake in the company.
Barring any unforeseen circumstances, the group expects the deal to be completed in the third quarter of the financial year ending Dec 31, 2015.
Shares in Asia Poly closed two sen or 2.82% higher at 73 sen, for a market capitalisation of RM62.42 million.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)