KUALA LUMPUR (April 3): In a bid to reduce its reliance on a single business, metallurgical coke manufacturer Sino Hua-An International Bhd is planning to diversify into the food and beverage and mobile app segments by acquiring two companies for a total of RM14 million cash.

In a filing with Bursa Malaysia, the red-chip company said it had signed a share purchase agreement with Chaswood Resources Sdn Bhd (CRSB), which owns TGI Friday in Malaysia and Teh Tarik Place, to acquire the entire stake in Bistromalones (PJ) Sdn Bhd for RM8 million.

In addition, Sino Hua-An said Craveat Management Sdn Bhd (CMSB) will be granted a call option which gives it the right to buy and requires Sino to sell to CMSB the call option shares at a call option price up to a maximum of 49% of the total paid-up capital of Bistromalones. CMSB is an investment holding company with an issued capital of RM100 comprising of 100 ordinary shares.

Sino Hua-An also signed a sale and purchase agreement with Wavetree PLT, Ng Chee Seng and Cindy Wong Ling Ping to purchase the business and asset building, plus intellectual property rights owned by Wavetree — an internet of things technology solutions provider — for RM6 million.

Simultaneously, Sino Hua-An also signed a shareholders agreement with Fancy Celebrations Sdn Bhd (FCSB) and Ng to govern the rights, liabilities and obligations of the shareholders vis-à-vis each other in relation to the management and operation of FCSB, a wholly-owned subsidiary of Sino Hua-An.

Sino Hua-An said it will distribute 49% of the total enlarged issued, fully diluted and paid up share capital of FCSB to Ng for free, with FCSB ultimately owned by Sino and Ng on a 51:49 basis.

Engaged in the manufacture and sale of metallurgical coke and other related by-products used as energy sources in the making of steel products, Sino Hua-An said the proposed acquisition will enable the group to diversify into new business segments which will provide an additional stream of revenue which may, in turn, improve the group’s shareholders value.

“The strategy of sole reliance on a single business source which is highly dependent on the steel industry, has over the years caused the group to operate in (a) challenging business environment and industry landscape and these had accordingly caused the group’s financial position to be quite volatile.”

For the full-year ended Dec 31, 2018, group net profit declined 63.38% to RM29.6 million from RM80.81 million in FY17, owing generally to lower average selling prices of metallurgical coke, lower sales volume as well as higher operating costs.

Revenue, however, rose 11.74% to RM996.39 million from RM891.63 million.

Shares of Sino Hua-An closed unchanged at 26.5sen, for a market capitalisation of RM297.41 million. The counter was heavily traded today with some 28.18 million shares changing hands.