PORT KLANG (July 9): In a move to expand its waste management service offerings, scheduled waste recycling company Tex Cycle Technology (M) Bhd (KL:TEXCYCL) is collaborating with Econas Resource to Energy Sdn Bhd (ER2E) for an integrated waste management project.
At the agreement signing on Tuesday, Texcycle said the collaboration marks a significant advancement in combining expertise for both parties to maximise business opportunities in scheduled waste management.
ER2E is known for its advanced, secured landfill and its upcoming incineration facilities and comprehensive waste management complex in Pengerang, which specialises in the collection, recovery and disposal of scheduled waste.
Under the collaboration, Tex Cycle’s group chief executive officer (CEO) Gary Dass Anthony Francis said Tex Cycle will be able to utilise ER2E’s end-of-life waste disposal facilities, namely the secured landfill and incineration plant, to extend the range of waste management services it provides to customers, enhancing the group’s ability to manage and process diverse waste types.
Tex Cycle will make use of its established market presence to support ER2E in promoting and expanding its waste management operations under this collaboration.
Francis said Tex Cycle can secure up to 5,000 tonnes of scheduled waste management works per month for ER2E. The collaboration is slated to start by the fourth quarter of this year.
Additionally, Tex Cycle will provide technical support and act as a third-party transporter to enhance ER2E’s operational efficiency, he added.
Francis said this partnership will enable Tex Cycle to leverage ER2E’s capabilities in waste management solutions, enhancing its service delivery and efficiency.
“We believe this collaboration will not only enhance our market presence but also significantly contribute to a more sustainable future with our core waste management processes, as well as boost our revenue significantly,” he added.
Tex Cyle continues buying spree
Tex Cycle, which is seeking a transfer of its listing to the Main Market from the ACE Market, is eyeing more acquisitions to fuel the company’s growth.
Last month, the group announced its latest acquisition — a 100% stake in Meridian World Sdn Bhd, which specialises in wastewater and air pollution control, for RM55 million, cash.
The acquisition would immediately contribute to earnings once it is completed as Meridian World comes with a profit-after-tax guarantee of at least RM12 million for the year ending December 2024 and 2025.
Meridian World operates a licensed scheduled waste recovery facility that handles everything from waste collection and transportation, to the recovery of scrap metal contaminated with oil or solvents.
“More acquisitions are in the pipeline for this year and next year.
“This year, we are looking to acquire a few companies that are slightly smaller than Meridian World. The companies we are targeting to acquire are within our core business and they will complement us in terms of capabilities. We tried to go with these established players and enhance from there and make it bigger,” Dass added.
Against this backdrop, Francis is confident in the group’s prospects and expects its net profit will continue to grow going forward.
Tex Cycle posted a record high annual earnings of RM15.74 million in the financial year ended Dec 31, 2023 (FY2023), up 61.62% from RM9.74 million in FY2022, lifted by a disposal gain of investment property and higher sales. Annual revenue rose 6.21% to RM35.09 million in FY2023, from RM33.04 million in FY2022.
For the first quarter ended March 31, 2024 (1QFY2024), Tex Cycle’s net profit jumped more than three times to RM6.6 million, from RM1.75 million in 1QFY2023, also due to a gain from asset disposal. Quarterly revenue, meanwhile, dropped 12.22% to RM8 million from RM9.1 million.
The company did not declare any dividend for 1QFY2024 and has no dividend policy at present.
On Tuesday, Tex Cycle’s share price closed up four sen or 3.1% to RM1.32, bringing the group a market capitalisation of RM333 million. Year-to-date, the stock has surged 91%.