KUALA LUMPUR (June 14): PPB Group Bhd (KL:PPB) has emerged as a substantial shareholder of Techbond Group Bhd (KL:TECHBND) after acquiring a 15% stake in the company on Friday.
In a bourse filing, PPB said it had acquired over 82.9 million shares and over 34 million unexercised warrants in Techbond from Sonicbond Sdn Bhd via a direct business transaction for RM37.67 million.
The shareholding will remain the same, PPB said, if it exercises all its warrants and assuming all other warrants are also exercised, but its total consideration for the acquisition will increase to RM48.9 million.
The shareholding of Sonicbond, which is the private vehicle of Techbond managing director Lee Seng Thye, will reduce to 54.39% after the disposal of the shares to PPB.
Techbond, listed on the Main Market of Bursa Malaysia, makes adhesives and sealants used in industrial and consumer products for sale within and outside Malaysia.
Meanwhile, PPB is a diversified conglomerate controlled by Malaysia’s richest individual, Robert Kuok. According to PPB's annual report for the year ended Dec 31, 2023, Kuok's private vehicle Kuok Brothers Sdn Bhd held a 50.49% stake in the group. The next largest shareholder is the Employees Provident Fund, with a 9.77% stake.
"Techbond's significant business operations in the manufacturing of adhesives and sealants are expected to benefit from global industrial growth in various sectors such as construction, automotive, woodworking, and packaging industries," PPB said on Friday, stressing that the investment is intended to be a long-term strategic holding.
PPB added that the acquisition would be funded through internally generated funds.
Techbond posted a net profit of RM4.04 million for the third quarter ended March 31, 2024 (3QFY2024), up 37.9% year-on-year from RM2.93 million, with revenue also increasing 35.63% to RM36.1 million from RM26.58 million.
The group attributed the improved performance to a healthy order flow, recovery of key industries, and contributions from its subsidiary Malayan Adhesives and Chemicals Sdn Bhd (MAC).
Interestingly, MAC is a half-century-old adhesive and chemical firm that was acquired by Techbond from Kuok-related companies last year.
In December 2022, Techbond announced its plan to acquire a 100% stake in MAC. The vendor of the 99.57% stake was Chemquest Sdn Bhd, in which PPB had a 55% stake and Kuok Brothers 45%.
The acquisition of the controlling stake in MAC from Kuok’s companies was completed in February 2023, while the purchase of the remaining 0.43% stake from minority shareholders was completed about five months later.
In line with the robust quarterly performance, Techbond's net profit for the first nine months of FY2024 nearly doubled to RM11.5 million from RM5.75 million in the same period of FY2023, with revenue increasing 50.74% to RM112.6 million from RM74.8 million. This is the group's best-ever topline and bottomline performance since listing in 2018.
Shares in Techbond closed unchanged at 43.5 sen on Friday, giving the group a market capitalisation of RM238.93 million. The counter has risen 8.75% from 40 sen since the beginning of the year, with a trailing 12-month price-earnings ratio of 0.03 times.
PPB shares finished down 14 sen or 0.96% at RM14.40, valuing the group at RM20.49 billion.