Bursa Malaysia’s ACE Market-listed Kanger International Berhad has concluded its Extraordinary General Meeting today, which saw it receiving shareholders’ approval for the proposed acquisition of 51% equity interest in building materials supplier, Sung Master Holdings Sdn Bhd for RM94.8 million to be satisfied via a combination of cash and new share issuance.
Kanger Executive Director, Steven Kuah Choon Ching said that the acquisition of Sung Master represents a significant step in the Group’s strategic plans to develop new income streams that are complementary to Kanger’s recent diversification into the property related and construction business segments.
Sung Master is primarily involved in the sales and trading of building materials, which include, timber flooring, tiles, bulk cement, concrete, locksets and sanitary ware. Based in Malaysia, Sung Master has an established network of clientele encompassing players from the property and construction industries as well as engineering consultants who are either a main contractor or a sub-contractor of a development project.
Since its commencement of operations up to 30 April 2021, Sung Master has supplied and is supplying a total of 22 projects, comprising both residential and mixed development projects, which are mainly located in Klang Valley and Pahang State.
“We are pleased to receive shareholders’ approval for this horizontal acquisition of an industry peer which enables us to widen our product offerings from our existing business of manufacturing and trading of bamboo flooring to also include other building materials such as timber flooring, tiles, bulk cement and concrete. This would enable us to expand our market presence and operational capacities, and to capture a larger market share in the trading of building materials industry in Malaysia,” he said.
Financially, Sung Master has consistently delivered a profitable performance over the past 3 financial years from FYE 31 January 2018 up to the audited 17-month FPE 30 June 2020 and latest unaudited 10-month FPE 30 April 2021. For the latest 10-month FPE 30 April 2021, Sung Master reported an unaudited profit after tax of RM11.8 million against revenue of RM76.0 million.
He added, “Despite the disruptions from the Covid-19 pandemic, Sung Master’s business operations continued to demonstrate strong resilience. For the FYE 30 June 2021, Sung Master’s revenue is expected to exceed RM115 million. Hence, the consolidation of Sung Master’s financial performance will augur well to the Group’s profitability and cashflow position in the near future.”
“The synergies that we will be able to leverage on from the acquisition of Sung Master will benefit the Group on multiple fronts, especially with regards to supporting our property related and construction business segments. Under the Group’s new construction business, we also intend to expand into areas such as undertaking building, construction, civil engineering and project management contracts. At present, the Group is working on construction projects which have an orderbook of approximately RM1.0 billion.”
“In addition, the construction business will allow us to leverage on the business network of our property investment and management segment and offer a broader range of value-added property-related services. By having access to a larger pool of building materials suppliers, Kanger is able to source supplies at relatively competitive prices, which will lead to improved cost efficiencies and enhanced competitiveness when tendering for new construction contracts,” he added.
Barring unforeseen circumstances, the proposed acquisition of Sung Master is slated to be completed in mid-September 2021.
To recap, the Group had recently also obtained shareholders’ approval for the proposed acquisition of 126 units of service apartments located in Antara @ Genting Highlands from Aset Kayamas Sdn Bhd (“AKSB”) for RM142.9 million.
“On a macro view, the acquisitions of Sung Master and the service apartments in Antara @ Genting Highlands mark a leap forward for Kanger to achieve its strategic goal of possessing a robust and diversified revenue portfolio. Our investment in the service apartments is expected to bring in recurring income in the form of rental and provision of management services as well as potential future capital gains for the Group. We are continuously seeking for suitable and viable acquisition opportunities in strategic locations to expand the contribution of the property investment and management segment of our Group,” he concluded.
