PETALING JAYA: Sunzen Biotech Bhd aims to diversify into the money-lending business with the proposed acquisition of the entire equity stake in Finsource Solution Sdn Bhd via a conditional share sale agreement for RM6.8 million.
According to its Bursa filing, the acquisition will be satisfied by the allotment and issuance of 41.21 million new ordinary shares in the group at an issue price of 16.5 sen.
The issue price represents its five-day volume weighted average market price on Jan 11, 2021 and takes into account Sunzen’s historical share price.
It stated that due to the interest of Teo Yek Ming and Ching Chee Pun in both parties, the transaction is deemed as a related party transaction pursuant to Bursa Malaysia’s ACE Market listing requirements.
Subsequently, Sunzen’s board has appointed an independent adviser to advise non-interested directors and non-interested shareholders as to whether the proposals are fair and reasonable.
It explained that the purchase price was arrived on a “willing-buyer, willing-seller” basis after taking into account Finsource’s FY2019 audited profit after tax of RM590,000 which translate to an implied price to earnings ratio of 11.5 times, as well as an average profit guarantee of RM1 million per year for FYE2021 and FYE2022, which translates to an implied PE of 6.8 times.
The group also cited that the acquisition also takes into account the company’s potential growth after taking into consideration the economic outlook and future prospects.
“The proposed diversification will enable the group to grow its money lending services after considering the demands from individuals and businesses for financing from non-bank financial service providers,” Sunzen said.
It is principally involved in biotechnology, R&D, manufacturing and marketing of animal health products, traditional Chinese medicine, herbal health foods and beverages as well as trading in crude palm oil – however, it said it has been facing challenges over the last two years and as such, it is seeking new business opportunities to have an additional income stream.
Sunzen stated that both proposals are subject to the approval of its shareholders to be obtained at an extraordinary general meeting, the approval of Bursa Malaysia securities as well as licences, approval and permits required for the money lending business from the authorities.
The proposals are expected to completed by the first half of this year.
