RUBBERWOOD furniture manufacturer Sand Nisko Capital Bhd is eyeing the creation of alternative income streams through potential mergers & acquisitions (M&As) of environmentally-friendly businesses in the realm of bio-fertiliser and refined-oil products.
Bio-fertiliser provides better efficiency and output for trees while refined-oil is a recycled oil product that is re-produced as a lubricant and addictive oil/biodiesel for the automotive industry.
“We like the environmentally-friendly business due to its positive impact on the environment and preserves natural resources,” commented the Sand Nisko’s newly-appointed executive directors Datuk Goh Soo Wee and Lee Ping Wei.
“The potential M&As in this space is also in line with our sustainability mission – prevent physical waste, improve resource productivity, improve profitability and enhance competitiveness.”
Above all else, these M&As could be synergistic expansion for the group as Sand Nisko has a strong balance sheet position with net cash that meets the funding needs to grow the business.
According to Goh, the group will allocate up to RM50 mil for capital expenditure (capex) which would involve investment into new or machinery upgrade to grow the businesses.
“Our strong balance sheet position is an advantage to grow the business. Given the inflationary environment, we think it is important for the group to put our money into better investing opportunities,” he pointed out.
In Lee’s view, the potential M&As puts Sand Nisko on a strong growth trajectory while allowing the group to gain exposure to new businesses. Aside from that, these M&As are also in line with Sand Nisko’s environment, social and governance (ESG) mission.
Towards this end, Sand Nisko will build a new customer base with the bio-fertiliser segment targetting both plantation companies and government agencies while the refined-oil business is associated with the automotive industry.
“Based on our research, bio-fertiliser is in strong demand, especially among plantation companies and government agencies looking for higher yields in their crops and in their quest to reduce fertilising cost,” he opined. “As for the refined-oil, it is suitable for customers who need quality base oil to reproduce final products.”
According to Goh, Sand Nisko has targeted companies with vast experience and strong track record in the said areas. This will allow the group to gain immediate exposure to an industry with a high entry barrier.
“One of the biggest challenges to gaining exposure in these businesses is technical expertise and know-how. The company we are looking for must offer us the mechanics to move forward in the business, hence they must have a strong team with strong credentials in the field,” he stressed.
“It must also have machinery in place for both the bio-fertiliser and refined-oil business. So instead of investing in the knowledge and building our own capacity, these M&As put Sand Nisko on a fast track to expand into the business.”
At 2.31pm, Sand Nisko was up 0.5 sen or 0.94% to 53.5 sen with 32,900 shares traded, thus valuing the company at RM124 mil. – March 31, 2022
