KUALA LUMPUR (Aug 21): RGT Bhd (formerly known as Asia Knight Bhd), which has returned to the black in its financial year 2019 ended June 30 thanks to contribution from its 60%-owned plastic products maker Rapid Growth Technology Sdn Bhd, plans to acquire the remaining 40% stake in the latter for RM48 million via the issuance of new shares.

The deal is a related party transaction as RGT is buying the remainder stake from its major shareholder Hor Lim Chee, managing director Ng Choon Keat, chief executive officer and executive director Lim See Hoe, and shareholder Tan Ann Chee, who collectively own a 29.47% stake in RGT now.

The consideration to be satisfied by the issuance of 282.35 million new shares at an issue price of 17 sen per share will raise the collective RGT stake held by the four to 52.64%, for which RGT intends to apply for an exemption from having to make a mandatory takeover offer for the company, according to RGT's stock exchange filing today.

Upon the completion of the acquisition, Rapid Growth Technology will become its wholly-owned subsidiary, RGT said.

RGT said the acquisition will allow the group to recognize a 100% financial results contribution from Rapid Growth Technology, which means RGT will be able to benefit from an immediate increase in its profit profit after tax and earnings per share.

RGT first bought the 60% stake in Rapid Growth Technology for RM48 million in Aug 2017, in a bid to exit its Practice Note 17 status.

The group subsequently shed its PN17 status this year, after having languished in PN17 since 2014, following a disclaimer of opinion expressed by its auditor over its financial statements for the 18-month period ended June 30, 2014, as its shareholders' equity shrank to less than 25% of its issued share capital.

Separately, RGT announced a net profit of RM6.09 million for FY19 against a net loss of RM1.83 million a year ago, as revenue jumped 3.6 times to RM94.52 million from RM26.43 million. It recorded a net profit of RM1.57 million in the final quarter of FY19, up 33% year-on-year from RM1.18 million, with revenue rising 12% y-o-y to RM19.06 million from RM17 million.

The group told Bursa Malaysia that prospects of the global plastics industry is expected to remain positive, as plastics' diverse applications lead to greater demand from multiple industries.

"The rapid technological advancements in increasing or improving the already unique properties of plastics will further drive demand for plastic products. The group is expected to improve further in light of the growing demand for companies to provide value-added services or the plastic products to Malaysia and global markets," it added.

RGT share price closed unchanged at 16 sen today, giving it a market capitalisation of RM89.42 million. The stock has retreated 16% over the past year.