PETALING JAYA: Bursa Malaysia has rejected Kinsteel Bhd’s proposed regularisation plan given the plan’s heavy reliance on its subsidiaries financial performance.
The proposed regularisation scheme is dependent on Perfect Channel Sdn Bhd (PCSB) and Perfect Wiremakers Sdn Bhd (PWSB)’s ability to generate sufficient revenue, income and operating cash flow.
PCSB and PWSB have registered low profit margins and continuing losses for the last five financial years from June 30,2016 to the 16-month financial period ended Oct 30,2020.
PCSB has also temporarily ceased operation due to a fire incident involving its power transformer.
“Notwithstanding the principal adviser’s representations that the proposed SOA reduces Kinsteel and its subsidiaries’ financial burden and pressure on cash flow and will contribute positively to the earnings of the Kinsteel Group, it is noted that the estimated savings via the reduction in the depreciation and finance costs are only able to narrow down the loss based on Kinsteel Group’s pro forma unaudited results for the financial period ended June 30,2020 whereby Kinsteel Group would remain loss making.
“Given the above, there are concerns on the sustainability, viability and growth prospects of Kinsteel’s core business post implementation of the proposed regularisation scheme, ” it said in an announcement to Bursa Malaysia.
In the event that the company does not appeal within the set timeframe, it will be removed from Bursa Malaysia.
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