TIMBER-BASED NWP Holdings Bhd has formed a new joint entity called NOOA Marine Sdn Bhd with OneOne Auro Marine Sdn Bhd (OOA Marine) to take over its sand dredging contract jobs, thus facilitating its sand mining business.
According to a filing with Bursa Malaysia yesterday (Nov 10), OOA Marine inked a novation agreement with NOOA Marine to novate all its rights, liabilities, benefits, interests, duties and obligations under the sand dredging contract to facilitate the sand mining business.
The novation agreement is supplemental to a letter of award issued by OneOne Auro Sdn Bhd to OOA Marine in June this year with respect to a project to extract marine sand from a concession area in Melaka for export purposes as well as the marine sand operator agreement entered into by OneOne Auro and OOA Marine.
The agreement forged in June this year has paved the way for the appointment of OOA Marine as the operator for the extraction of marine sand activities at the concession in Melaka.
“This novation agreement is in line with the agreement that we signed at that time where we intend to set up joint venture (JV) operations to take on the sand dredging business,” commented NWP’s non-executive chairman Datuk Tan Lik Houe.
“This will help NWP and OOA Marine optimise its resource allocation to drive its new business and generate a positive revenue stream.”
In a bigger picture, formation of the said JV entity helps NWP to diversify its existing business to include sand mining, trading and export of sand, and other related business activities.
Meanwhile, NWP’s executive director Tan Jyy Yeen is positive that the joint entity will drive earnings growth for the group with business expansion and diversification into the sand dredging business.
“Given the scope of work that includes services for sand dredging operations and transportation of sand to the mother vessels, the business operations risks are relatively low and are not exposed to the risk from foreign exchange,” she justified. “This put us in a good position amid global inflationary pressure.”
Jyy Yeen further noted that the business operations are already operating at a healthy margin despite the high oil prices currently.
“Going forward, as oil prices moderate and normalise, we will see our profit margin in the sand dredging business expand,” she projected.
“The contract and formation of the joint entity put us in a good position to expand and diversify our business into the sand dredging business. This helps to create a new opportunity for NWP to generate additional revenue and drive growth.”
At the close of yesterday’s (Nov 10) trading, NWP was down 0.5 sen or 2.17% to 22.5 sen with 24.28 million shares traded, thus valuing the company at RM128 mil. – Nov 11, 2022
