KUALA LUMPUR (Sept 20): Techna-X Bhd, which has been building up its energy storage and digital transformation businesses, will temporarily cease its loss-making metallurgical coke business operations by Dec 31, 2021.
The company said wholly-owned Linyi Yehua Coking Co had decided to suspend its coke operations until such time when the business improved and clearer visibility on the way forward could be established.
In a statement today, Techna-X said its coke business, which has been classified as “discontinuing operation”, remained in dire situation, as it recorded a cumulative net loss of about RM59.1 million for the six-months period ending June 30, 2021.
“The temporary cessation will immediately address the ongoing operational losses, as well as to stem the continuous extensive financial strain on the group,” it said.
Executive chairman Tunku Naquiyuddin Tuanku Ja’afar said the board’s decision to temporary cease this business was an attempt to safeguard its shareholders’ value and to preserve the financial position of the group from deterioration further pending the completion of the proposed disposal of the metallurgical coke business.
On Nov 11, 2020, the company signed a conditional agreement with Hua Fei Investment Ltd to dispose of its direct stake in wholly-owned subsidiary PIPO Overseas Ltd, and in turn its entire indirect interest in Linyi Yehua Coking Co, for about RM54 million.
The group’s metallurgical coke business has been suffering significant losses over the past few years with losses of about 308 million renminbi (RM1 = 1.54 renminbi) in financial year (FY) 2019, 265 million renminbi in FY2020 and about 100 million renminbi for the first half of FY2021.
“Such trend is expected to continue for the remaining second half of the current year. The industrial coke division continues to have limited visibility of recovery as the coke industry (especially for independent coke producers) is expected to continue to face many challenges moving forward,” it added.