KUALA LUMPUR (Sept 24): Building material supplier Chuan Huat Resources Bhd has disposed of its entire 6.03% indirect stake in loss-making Amalgamated Industrial Steel Bhd (AISB) to privately held Telaxis Sdn Bhd for RM3.15 million or 38 sen per share.

The disposal will give rise to a gain of RM1.24 million.

Chuan Huat said the gain on disposal is expected to have a positive impact on the group's earnings per share, net assets per share and gearing for the financial year ending Dec 31, 2019.

In a bourse filing today, the group said the 8.3 million AISB shares, representing the 6.03% stake, is an investment asset of its wholly-owned subsidiary Chuan Huat Hardware Holdings Sdn Bhd.

"The disposal is a divestment of the investment with the purpose of available fund for other potential future investment," it added.

AISB executive director Lim Chin Sean is a substantial shareholder of Telaxis, which owned a 22.88% stake in AISB as at March 29.

Chuan Huat noted that a total of 8.41 million AISB shares were acquired in 2011/12 for RM3.74 million. Subsequently, 112,600 shares were disposed of in 2016/17.

"The quoted shares were also subjected to impairment losses, which resulted in a net book value of RM1.91 million as in the company's quarterly report for the financial period ended June 30, 2019 announced on Aug 29. Hence, the net disposal proceeds of RM3.15 million will give rise to a gain on disposal of RM1.24 million," it added.

The disposal will be completed upon settlement of the completed direct business transaction.

Chuan Huat shares closed unchanged at 38 sen today, with 29,700 shares done, bringing a market capitalisation of RM64.09 million. AISB shares ended the day 2.5 sen or 9.8% lower at 23 sen, with 305,00 shares traded, for a market value of RM33.21 million.