KUALA LUMPUR (March 23): ACE market-listed Techfast Holdings Bhd has secured a contract worth RM540 million to supply marine gas oil products to Huang Fan Sdn Bhd.
Its wholly-owned subsidiary Fast Energy Sdn Bhd had entered into a supply agreement today with Huang Fan for the contract to supply up to 6,000,000 litres of the product each month to the group for the consumption of its vessels, Techfast said in a filing with Bursa Malaysia today.
Huang Fan is principally engaged as subcontractor in sand barrier projects, dredging, drilling, blasting, land reclamation, marine sand reclamation, marine construction and subsea structures. The group also carries on business as surveyors and suppliers, wholesalers, retailers, dealers and distributors of sand.
“The supply agreement shall be effective for a period of forty-five (45) months from its date (Contract Period),” said Techfast.
This worked out to RM12 million per month or RM144 million a year. For its financial year ended Dec 31, 2020, Techfast reported a revenue of RM33.15 million.
In today’s announcement, it said the agreement will add to the revenue streams of the group and is expected to contribute positively to the earnings of the Techfast Group, in line with the group’s objectives to expand its market share in the oil and gas industry.
“Techfast does not expect any material risk arising from the agreement, other than the normal business and operational risks such as the default by Huang Fan of its payment obligations under the Supply Agreement. Techfast anticipates that such risks will be mitigated, as collateral will be provided by Huang Fan, prior to the commencement of any transaction under the Supply Agreement,” it added.
The group, which makes self-clinching fasteners and electronic hardware for the electronic, telecommunication, and information technology industries, anticipates it will commence the supply of marine gas oil by the end of March 2021.
Shares of Techfast rose 1.5 sen or 3.06% to 50 sen today, giving it a market capitalisation of RM126.74 million.