KUALA LUMPUR (July 24): Kumpulan Perangsang Selangor Bhd (KPS) obtained its shareholders’ approval to acquire 100% equity stake in Toyoplas Manufacturing (M) Sdn Bhd and its subsidiaries for RM311.25 million.
In a statement today, KPS said shareholders voted in favour of the acquisition by its subsidiary Perangsang Dinamik Sdn Bhd, in an extraordinary general meeting today.
Toyoplas, which is involved in the plastic injection moulding business, has an integrated capability from mould fabrication, precision injection moulding and secondary processes to full assembly of parts or products.
KPS said the acquisition valuation is within the industry benchmark, in terms of enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) and price-earnings (P/E) ratios of 5.23 times and 8.66 times respectively, and will be fully satisfied by internally-generated funds and borrowings.
The group said Toyoplas is a one-stop solutions provider to its clients and operates from seven manufacturing plants of over 1,000,000 square feet across three countries, namely Shanghai, Dongguan and Nanning in China; Ulu Tiram, Muar and Senai in Malaysia; and Jakarta in Indonesia.
Moreover, it also has clients in the communications & multimedia, automotive and volume-based consumer appliances sector, most of whom have been with the company between 8- and 21 years.
KPS said Toyoplas’ financial performance is expected to be sustainable, driven by robust outlook of the E&E industry in China and Malaysia, growing demand for plastic components from various underlying industries, including packaging, home appliances, automotive and medical devices.
KPS managing director and chief executive officer Ahmad Fariz Hassan said Toyoplas is expected to provide further synergy within the group by complementing its subsidiary CPI (Penang) Sdn Bhd’s business dynamics.
“Potential synergies will cover client sourcing, combined procurement of raw materials, which is expected to improve overall business efficiency and optimise cost for both entities,” he said.
He added that the acquisition will also create economies of scale, increase control over supply and value chains, and help the group venture into new markets.
“Coupled with its diversified geographical and customer mix, we are optimistic that Toyoplas Group will be able to contribute positively to KPS’ financial performance from the third quarter ending Sept 30, 2019 onwards [3QFY19], ultimately generating sustainable growth and greater returns for all our stakeholders,” he said.