KUALA LUMPUR: Property developer Tiger Synergy Bhd proposes to acquire a 100% stake in BPE Synergy Engineering Sdn Bhd for RM16 million, which will pave the way for it to diversify into the semiconductor industry.
The acquisition will be satisfied through the issuance of 200 million Tiger Synergy shares at an issue price of 8 sen per share, hence shareholders of BPE will hold about 10% stake in Tiger Synergy.
Tye Chin Chow is the largest shareholder of BPE, with a 54.72% stake. He is also a director of the company.
Speaking to reporters after a signing ceremony of the memorandum of understanding here yesterday, Tiger Synergy managing director Shirley Tan Lee Chin said the deal is expected to be completed within the first half of the year and it will provide an immediate profit contribution to the company.
The acquisition will entail a profit guarantee of at least RM2 million a year for three years.
However, filings with the Companies Commission of Malaysia show that BPE only reported a net profit of RM1.15 million for the financial year ended March 31, 2015, a more than six-fold jump compared with RM180,159 a year before. This was on the back of a 181.82% growth in revenue from RM1.75 million to RM4.94 million.
Malacca-based BPE is specialised in design and assembly printed circuit board (PCB), design, fabrication, assembly mechanical parts and PCB repair & recondition services. The company is planning to expand to neighbouring countries such as Thailand, Vietnam and the Philippines.
Commenting on the synergy from the deal, Tan said Tiger Synergy will be able to offer value-added properties with smart technology by capitalising on the experience and competencies of BPE.
With that, she expects the new feature will help boost the company’s property sales amid the slowing property market.
For the financial year ended June 30, 2015 (FY15), Tiger Synergy swung into the red registering a net loss of RM2.05 million compared with a net profit of RM1.41 million in FY14.
However, for the first quarter ended September 30, 2015, it returned to the black with a net profit of RM620,000 versus a net loss of RM693,000 in the same period a year before.
Tan believes the company is on track for a turn around for FY16, driven by new property launches and its venture into the semiconductor business. Revenue-wise, it is expected to register a strong growth of 200% for FY16 from RM15.14 million in FY15.
The company will launch property projects worth RM500 million in gross development value over the next two years, including the Alam Impian, Gombak and Cheras projects.
These projects are expected to contribute a gross profit of RM93 million in the next three years.
The company is also looking to secure new landbank and joint venture opportunities to expand its property development business.
Tiger Synergy shares were unchanged at 9 sen on some 38.3 million shares done.