PETALING JAYA: Heng Huat Resources Group Bhd is poised to become the single largest market leader in the Malaysian coconut fibre segment with the acquisition of a 97% stake in Sabut Kelapa Terengganu Sdn Bhd (SKT) for RM200,000 cash.
SKT is involved in the manufacturing and trading of coconut biomass materials and value-added products. It owns a manufacturing plant with a size of 20,230 sqm in Setiu, Terengganu.
The manufacturing plant has a production capacity of 150 metric tonnes (mt)/month and 240 mt/month for its coconut fibre and coco peat, respectively.
According to estimates, Heng Huat will emerge as the single largest player in the Malaysian coconut fibre segment, with a market share of about 80% following the acquisition.
Heng Huat managing director Datuk H’ng Choon Seng said the synergies between SKT and the group would ensure a huge amount and constant supply of raw materials such as coconut husks at a cost-effective price.
In addition, he opined that there will be a significant reduction in transportation cost as the distance to the factory is much shorter.
“In the long term, we foresee that once the East Coast Rail Link project is ready, we can leverage on it to deliver our products directly to Port Klang for export purposes,” he added.
SKT has been awarded a tax holiday incentive from the government with a tax exemption on operational income for 10 years.
For the financial year ended December 31, 2018, SKT incurred a net loss of RM728,839.
