TIMBER-BASED NWP Holdings Bhd has identified sand dredging as the right avenue to reduce the group’s reliance on its core timber business.
This come about as the company’s wholly-owned subsidiary NWP Marine Sdn Bhd today entered into a joint venture agreement with OneOne Auro Marine Sdn Bhd (OOA Marine) as a contractor involved in the dredging, transportation and loading of marine sand from the concession area onto mother vessel(s) for export purposes or to local reclamation sites (JV operations).
A filing with Bursa Malaysia today shows that the JV operations shall be undertaken by a joint venture company which will be established by NWP Marine (51%) and OOA Marine (49%) respectively.
“The JV operations will open up a new range of possibilities for the group to expand our revenue stream and venture into sand dredging business that will drive the turnaround for the group in the near-term,” commented NWP’s non-executive chairman Datuk Tan Lik Houe.
“We are excited with potential of the new business in helping to generate recurring cash flow and steady income stream for the group.”
In the same stock exchange filing, NWP also proposed to diversify its existing business activities to include sand mining, trading and export of sand, and other related business activities as well as a private placement of up to 10% of the total number of its issued shares.
OOA Marine is the operator appointed by OneOne Auro Sdn Bhd to provide sand extraction services at a concession area in Melaka for both export and local reclamation purposes by fulfilling an average order of five mother vessels per month for export purpose.
OneOne Auro is the exclusive and lawful dealer for marine sand export of the Melaka-based concession owner Bahtera Teroka Sdn Bhd.
The company has been granted an exclusive right to manage and appoint operator to undertake activities involving extraction, dredging, transporting of marine sand from the concession area to ship-to-ship points and loading marine sand onto carrying mother vessels.
The concession owner has been granted a license to extract marine sand in the territorial waters of Tanjung Kling in Melaka for a period of three years as well as approval by the Energy and Natural Resources Ministry to export marine sand extracted from the concession area.
Meanwhile, NWP’s executive director Tan Jyy Yeen said the group’s diversification into the sand dredging business has put it on the right footing to expand its growth strategies over the next five years.
“In addition, the business operations are low risk as our role is to provide services for sand dredging operations and transport the sand to mother vessels. As such, we are not exposed to the risks from the volatility of oil prices and foreign exchange,” she explained.
“Based on the current oil prices, the business operations are already operating with a healthy margin. This profit margin will expand once the oil prices normalise and moderate to a lower level.”
Jyy Yeen added that the successful venture into the sand dredging business will create a new opportunity for NWP to add value to its shareholders.
At 3.02pm, NWP was up 0.5 sen or 1.92% to 26.5 sen with 8.38 million shares traded, thus valuing the company at RM140 mil. – July 26, 2022
