KPS gets shareholders' approval to acquire Toyoplas for RM311.25 mln

KUALA LUMPUR, July 24 (Bernama) -- Kumpulan Perangsang Selangor Bhd (KPS) received a shareholders’ approval at the extraordinary general meeting to acquire 100 per cent equity stake in Toyoplas Manufacturing (Malaysia) Sdn Bhd (TMM) and its subsidiaries for RM311.25 million.

In a statement, KPS said the acquisition was made via its subsidiary, Perangsang Dinamik Sdn Bhd.

The valuation of the acquisition's purchase price was within the industry benchmark, in terms of enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) and price-earnings (P/E) ratios of 5.23 times and 8.66 times, respectively.

The exercise would be funded by a mixture of equity and term loan, each amounting to RM161.25 million and RM150.0 million, respectively, it said.

The group said TMM has full range of expertise, involving in the plastic injection moulding business with an integrated capability from mould fabrication, precision injection moulding and secondary processes to full assembly of parts or products.

TMM operates from seven manufacturing plants of over one million square feet across three countries, including Shanghai, Dongguan and Nanning in China, Ulu Tiram, Muar and Senai in Malaysia, and Jakarta in Indonesia, thus enjoying a wide customer base from diversified sectors.

 It also boasts a strong and diverse multinational clientele from the communications and multimedia, automotive sectors, as well as from volume-based consumer appliances sector. 

TMM Group's financial performance is expected to be sustainable, driven by robust outlook of the electrical and electronics (E&E) industry in China and Malaysia.

The outlook is envisaged to remain resilient, sustained by growing demand for plastic components from various underlying industries, including packaging, home appliances, automotive and medical devices.

Managing director/ group chief executive officer Ahmad Fariz Hassan said TMM meets all the desired investment criteria by unlocking full potential of Perangsang Selangor’s plastic injection moulding business.

"It was anticipated to provide further synergy within the group via TMM’s complementing CPI (Penang) Sdn Bhd’s business dynamics.

“Potential synergy will likely be, among others, from the areas of client sourcing and combined procurement of raw materials, which is expected to improve overall business efficiency and optimise cost for both entities," he said.

Marking KPS's second yet bigger entry into the plastic injection moulding business after CPI, the acquisition provides the group with greater regional presence and brand positioning as an integrated plastic injection moulding solutions provider. 

The bolt-on acquisition, he said is a competitive strategy that will create economies of scale, increase control over supply and value chains, and helps expand the group’s existing business by venturing into new markets.

"Coupled with its diversified geographical and customer mix, we are optimistic that TMM Group would contribute positively to Perangsang Selangor's financial performance from the third quarter ending Sept 30, 2019 onwards, ultimately generating sustainable growth and greater returns for all our stakeholders,” Ahmad Fariz added.

-- BERNAMA