Hong Seng to dispose of 2m shares in Hong Seng Priority Management for RM34.5m

by TMR / pic credit: hongseng.com.my

HONG Seng Consolidated Bhd entered into a Shares Sale Agreement with Robust Potential Sdn Bhd for the disposal of 2 mil ordinary shares representing 100% of the equity interest in Hong Seng Priority Management Sdn Bhd for a total cash consideration of RM34.50 million resulting in an estimated gain of  approximately RM31.20 million.

In a statement today the company said HSPM is principally engaged in the business of providing hire purchase financing.

On 16 August 2021, HSPM had entered into a Collaboration Agreement with Sino EV Assembly Sdn Bhd to collaborate exclusively in Malaysia for the business of importing, assembling, marketing, financing and providing after sales service of the electric vehicles for a period of 5 years.

The profit was to be shared based on the number of electric vehicles sold during the term of the Collaboration Agreement.

The Collaboration is anticipated to enhance HSPM’s loan portfolio and to contribute positively to the future earnings and net assets of HSPM.

“Despite HSPM’s future earnings potential and prospects, the business would require significant working capital requirements in order to crystallize the potential earnings benefits.

Therefore, this timely opportunity to dispose at a gain is viewed positively by the Group as it allows the Group to immediately unlock and realise the value of the investment and assets in HSPM,” said Managing Director Datuk Seri Teoh Hai Hin.

The proceeds received from the Proposed Disposal will mainly be used by Hong Seng for working capital purposes for the Group’s healthcare and gloves business which are more sustainable and have shorter gestation period and to fund for any future business expansions.

Hong Seng has expanded its healthcare business from providing 3rd party and 4th party logistics services to the entire end-to-end healthcare supply chain.

This encompasses the front-facing and back-end processes, physical logistics, digital healthcare platform, medical laboratory facilities, research and development services as well as the provision of medical and healthcare supplies for both private and public sectors.

The group is still in the midst of setting up its glove production plant in Sg Petani, Kedah and it expects the new business venture into the manufacturing and trading of gloves to commence by October 2021.