KUALA LUMPUR (Nov 10): NWP Holdings Bhd has said its newly formed joint entity, NOOA Marine Sdn Bhd, will undertake contracting work to dredge, transport and load marine sand from a concession area in Melaka onto vessels for export purposes.

NOOA, the joint venture between NWP's unit NWP Marine Sdn Bhd and OneOne Auro Marine Sdn Bhd (OOA Marine), will also dredge and transport marine sand from the concession area to local reclamation sites for reclamation purposes, the timber product manufacturer said in a filing with Bursa Malaysia.

NWP said OOA Marine has signed a novation agreement to novate all its rights, liabilities, interests and obligations under the sand dredging contract to NOOA Marine in order to facilitate the sand mining business.

The group said the novation agreement is supplemental to the letter of award issued by OneOne Auro Sdn Bhd to OOA Marine in June with respect to a project to extract marine sand from the concession area in Melaka.

In a statement, NWP non-executive chairman Datuk Tan Lik Houe said the novation agreement will help NWP and OOA Marine optimise their resource allocation to drive their new business and generate a positive revenue stream.

NWP executive director Tan Jyy Yeen, meanwhile, said the joint entity will drive earnings growth for the group as it expands its business and diversify into the sand dredging business.

"Given the scope of work that includes services for sand dredging operations and transportation of sand to the mother vessels, the business operations' risks are relatively low and are not exposed to the risk from foreign exchange. This puts us in a good position amid global inflationary pressure," she added.

Jyy Yeen said the business operations are already operating at a healthy margin despite the high oil prices currently.

"Going forward, as oil prices moderate and normalise, we will see our profit margin in the sand dredging business expand. The contract and formation of the joint entity put us in a good position to expand and diversify our business into the sand dredging business," she added.

NWP's share price closed down 0.5 sen or 2.17% at 22.5 sen on Thursday (Nov 10), giving the group a market capitalisation of RM128 million.