KUALA LUMPUR (Oct 9): Kronologi Asia Bhd is acquiring Quantum Storage (Hong Kong) Ltd for RM45 million in a bid to expand into the enterprise data management (EDM) market, especially in Hong Kong and Taiwan.
 
The purchase price will be satisfied through the issue of up to 40.8 million new Kronologi shares at 98 sen each and a cash payment of up to RM5 million, the group said in a filing with Bursa Malaysia.
 
Kronologi said the RM45 million price tag was agreed at after arms’ length negotiations and based on a willing buyer-willing seller basis, and will be settled on a staggered payment basis. It represents a price-to-earnings multiple of 8.85 times, based on the profit warranty for the year ended Dec 31, 2017 (FY17) of US$1.2 million.
 
The profit warranty was viewed as reasonable and realistic, after taking into consideration of the unaudited net profit of Quantum Storage (HK) for the first six months of FY17 of US$580,000, as well as the prospects of Quantum Storage (HK) and the enlarged Kronologi group.
 
Law Chee Yii, who is a director and owns 100% equity interest in Quantum Storage (HK), was a non-substantial shareholder of Kronologi since 2014, but does not hold any shares in the group as at Oct 6. After the acquisition however, he will have a 12.1% stake in Kronologi.
 
Kronologi said the group intends to fund the RM5 million cash payment via proceeds raised from the private placement of new Kronologi shares, which was completed on Aug 25.
 
Currently, Kronologi’s presence in the EDM industry covers South East Asia, as well as India. With Quantum Storage (HK)’s exposure in Hong Kong, Taiwan and others, this provides an exposure for Kronologi in an EDM regional market with growth opportunities, spurred by increasing internationalisation and technology adoption by the economies of greater China.
 
Kronologi’s share price fell 1.02% to 97 sen today, giving it a market capitalisation of RM288.5 million. Year to date, Kronologi has given a total return of 212.9%. At current level, it is trading at a trailing P/E of 23.8 times.