AMID a spike in global aluminium price, Mestron Holdings Bhd has put the group in an advantageous position with the acquisition of a 10% stake in one of Malaysia’s largest one-stop aluminium extrusion and accessories centre.
Yesterday (Feb 11), the company inked a share sale and purchase agreement (SSPA) with Chua Nyok Chong and Chua Boon Hong to acquire 806,000 ordinary shares or 10% of the share capital of Winstar Aluminium Manufacturing Sdn Bhd for RM6 mil.
A filing with Bursa Malaysia shows that Nyok Chong also grants Mestron a call option to acquire another 20% of Winstar in two tranches within 365 days from the date of the SSPA for a total sum of RM12 mil.
The acquisition will enable Mestron to directly source aluminium parts for its solar panel business, thus reducing its operational cost while speeding up the process of procuring the necessary aluminium parts.
This fits into Mestron’s existing business to revolutionise conventional lighting in tandem with consumers growing expectations towards modernisation and urban instinct, according to Mestron managing director Por Teong Eng.
“This is a synergistic acquisition that will allow the group to increase our range of value-added services to our existing and prospective customers,” he pointed out. “We know that it is vital to enhance our product and service offerings to our customers, so this acquisition will put us in a stronger position to meet our customers’ needs.”
Incorporated in 2022, Winstar is a private company principally involved in manufacturing, fabricating, processing and trading of aluminium, metal and alloy. It is now one of Malaysia’s largest one-stop aluminium extrusion and accessories centres with production facilities located on a six-acre site in Ijok, Selangor.
Aside from that, Winstar also has a strong earnings track record. For FY2021, it recorded more than RM90 mil of revenue despite the movement control order (MCO) that was imposed to contain the spread of COVID-19 infection.
According to Por, the option to increase Mestron’s stake in Winstar over the next one year is also a strategic option for the group as it does not require an immediate cash outflow.
“This one-year period will provide us with better visibility of the Winstar management and ensure the synergies can be unlocked before increasing our stake in the company,” he justified.
“Given the rising inflation environment, it’s vital for the management to maintain prudence in the management of our cash flow. In the long-term, Mestron aims to put Winstar on a fast track expansion by leveraging our strategic synergies.”
At the close of yesterday’s (Feb 11) trading, Mestron was down 0.5 sen or 1.56% to 31.5 sen with 1.82 million share traded, thus valuing the company at RM293 mil. – Feb 12, 2022
