The timber and plantation company has, via its wholly-owned subsidiary Kuching Plywood Bhd, acquired the entire equity interest in Sing Chew Coldstorage Sdn Bhd (SCCS) for RM20mil cash. (File pic: WTK logging with helicopter)
KUCHING: WTK Holdings Bhd
is venturing into the frozen food business as a new revenue stream.
The timber and plantation company has, via its wholly-owned subsidiary Kuching Plywood Bhd, acquired the entire equity interest in Sing Chew Coldstorage Sdn Bhd (SCCS) for RM20mil cash.
WTK group, which has cash and balance balances of about RM386mil as at Dec 31, 2021, paid for the acquisition from internally-generated funds. The deal was completed on June 15.
SCCS is an importer, wholesaler and retailer of frozen foods. For the financial year ended Sept 30, 2021 (FY21), it reported a net profit of RM1.85mil on turnover of RM69.1mil, as compared to RM1.27mil and RM73.4mil respectively in FY20.
“With more than 20 years in operations, SCCS has an established track record in the frozen food industry. SCCS holds various agencies for reputable brands of food products and has its own brand, namely burgers, nuggets, frankfurters and crab sticks,” according to WTK.
WTK said with SCCS becoming its wholly-owned subsidiary, it provides an opportunity for the group to diversify into the business of importer, wholesaler and retailer of frozen foods and with a long-term viable business with growth opportunity.
WTK is among Sarawak’s top five timber companies and is involved in upstream logging operation, reforestation and downstream timber processing activities, including plywood manufacturing.
Due to the weak plywood market and prolonged log shortage, the group’s timber business has been in the red for the past three consecutive financial years, reporting pre-tax loss of RM67.6mil (2019), RM154.9mil (2020) and RM32.5mil (2021) as revenue shrank from RM453mil (2019) to RM209mil (2020) and further to RM179.9mil (2021).
Going forward, WTK expects its timber business to continue facing challenges with the anticipation of a slowdown in log production, due to declining natural logs and stricter operational requirements arising from timber certification.
In Japan, the company said in its 2021 annual report that logistical disruptions and escalating freight rates have led to more customers sourcing plywood supply locally.
However, with the robust palm oil market, the group’s oil palm plantation business has made a turnaround with a pre-tax profit of RM18.9mil in 2021 after suffering losses of RM29mil and RM38.9mil in 2019 and 2020 respectively.
The strong selling prices of crude palm oil (CPO) and palm kernel has boosted revenue to RM150mil in 2021 from RM86.1mil (2020) and RM64.1mil (2019).
On prospects, WTK expects satisfactory performance of its plantation business in FY2022, in view of the firm CPO price and as more of the group’s palm trees matured into prime age production cycle.
WTK is also into manufacturing and sales of adhesive and gummed tapes.
