VIVOCOM International Holdings Bhd has today announced its proposed diversification to include the sales and trading of iron ore as well as other minerals.
A filing with Bursa Malaysia today shows that Rain International Sdn Bhd, a 97%-owned subsidiary of V Development Sdn Bhd which in turn is a 45%-subsidiary of Vivocom, has accepted a letter of intent (LOI) dated May 25, from a China-based natural resources and minerals wholesaler.
The LOI stated the intention of the Chinese wholesaler to purchase iron ore from Rain International with a minimum of three shipments fetching 50,000 metric tonnes of iron ore per shipment on monthly basis.
The order is for a period of 24 months with a renewal option for a further 24 months.
The diversification into this new business segment puts Vivocom on the right track to capitalise on the world’s soaring demand for scarce minerals. Apart from iron ore, Vivocom also eyes the trading of other commodities such as iron, zinc and copper.
The trading of minerals would also provide the group with a stable and long-term recurring income that would pave the way for a sustainable dividend pay-out and improved shareholders’ value.
“The demand for minerals are set to skyrocket along with China’s economic recovery to pre-pandemic levels,” commented Vivocom’s CEO Datuk Seri Chia Kok Teng (standing centre in pic).
“China’s consumption – about half of the global total – will keep growing to new record levels as the demand from the rest of the world also rebounds strongly.
“Vivocom is thrilled to share that it is in final stages of negotiation with several parties for the supplies of minerals worth several billion ringgit in value which should be concluded soon.”
According to Chia, Vivocom targets to announce at least three contracts for iron ores worth from RM290 mil monthly up to RM6 bil in total in due course – by end-June or early July.
“We target to deliver at least RM3 bil worth of minerals to our clients overseas during the financial year ending June 30, 2022,” projected Chia. “This is expected to contribute a gross profit of RM250 mi or higher to Vivocom in that financial year.”
The strong earnings from these cash-cow projects will not only boost Vivocom’s financial performance, but also pave the way for us to implement continued dividend pay-outs in the future, added Chia.
At the close of today’s morning session, Vivocom was up 4 sen or 5.63% to 75 sen with 51.37 million shares traded, thus valuing the company at RM680 mil. – May 27, 2021
