CI Holdings buys edible oil manufacturer to expand exports market

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KUALA LUMPUR (May 12): Edible oils manufacturer C.I. Holdings Bhd (CI Holdings) has acquired 60% in Palmtop Vegeoil Products Sdn Bhd (Palmtop) for RM8.25 million, to expand its current exports in manufacturing and packaging of resource based products.

Based on the filing with Bursa Malaysia, CI Holdings’ wholly-owned subsidiary Continental Resources Sdn Bhd (CRSB) would subscribe 8.25 million shares in Palmtop. This represents 60% of the enlarged issued and paid up share capital of Palmtop — a company involved in buying and selling, manufacturing and packing of refined bleached deodorized (RBD) palm olein and all types of edible oils.

“The proposed acquisition provides value added benefits for CRSB to expand its current export markets in manufacturing and packaging of resource-based products, including RBD palm olein and any other blended soft oils which are exported to various parts of the world,” said CI Holdings in the filing.

According to CI Holdings (fundamental: 1.86; valuation: 0.6), the “true intrinsic value” of Palmtop is in the latter’s two directors, Datuk RA Sukumaran and Datuk Tan Fok Wah.

“Datuk Sukumaran, a sales and marketing person, is a well-known personality in the Malaysian edible oil business and has been successful in leading several key players in the edible oil business in Malaysia and Singapore, including but not limited to Saber Private Limited of Singapore.”

“Datuk Sukumaran brings a wealth of sales experience for the customer pack market for edible cooking oil as access to over 95 countries. CRSB currently exports to forty-eight countries,” it added.

Tan meanwhile is the key operations or technical person tasked in designing and configuring Palmtop packaging or filing lines.

CI Holdings said the acquisition would be completed by May 15, 2015.

The deal, which will be funded through internally-generated funds, will not have any material adverse effects on the share capital, earnings, net assets per share and gearing of the company for the financial year ending June 30, 2015. However, it is expected to contribute positively to the future earnings of the group.

CI Holdings share price has nearly tripled since mid-February. The stock had climbed from RM1 in February to record high of RM2.91 last Friday (May 8). It dropped three sen at RM2.86 today, giving it a market capitalisation of RM463.32 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.)