KUALA LUMPUR (Dec 12): Unitrade Industries Bhd has proposed to enter the metal recycling market by acquiring a 51% stake in Intergreen Metals Sdn Bhd for RM66.3 million, in a move aimed at complementing the group's core operations in building materials wholesaling.

The acquisition represented an opportunity to broaden the group’s earnings base, Unitrade said in a statement on Monday.

"Intergreen Metals has a proven track record of delivering consistently healthy revenue and profit over the past three years. Additionally, the included profit guarantee in the proposed acquisition is expected to strengthen Unitrade’s bottom line, offering a positive prospect for continued growth," said Unitrade managing director Nomis Sim Siang Leng.

The acquisition of the stake from Intergreen Holdings Sdn Bhd (IHSB), Intergreen Corp (M) Sdn Bhd (ICSB), and Pong Wing Seng comes with a guarantee that Intergreen Metals will achieve a profit after tax of RM45 million over three years.

Intergreen Metals, established in 2003, specialises in collecting and processing metal waste to be recycled into input feedstock for steel manufacturers.

"By venturing into metal recycling, we are penetrating the circular economy market and promoting responsible consumption through optimisation of material usage," said Sim. "Currently, our network of industry contacts overlaps with that of Intergreen Metals — we procure products from steel manufacturers, and they provide metal waste as raw materials to these mills."

Unitrade said the acquisition is expected to be funded fully through internally generated funds and be completed by the end of  this year.

Shares in Unitrade closed unchanged at 28 sen, giving the group a market capitalisation of RM437.5 million. Year to date, the stock has surged by 33.33%.