KUALA LUMPUR (July 11): Loss-making Asia Poly Holdings Bhd (KL:ASIAPLY) said it is buying a 50% stake in a IT engineering firm, Darwell Asia Pacific Sdn Bhd — a move to venture into telecommunications engineering and data centre support services.

The stake acquisition will cost RM6.1 million in cash. 

The cast acrylic sheets manufacturer is buying the stake from Darwell’s current directors namely Ooi Chee Seong, who will disposed 48% of his stake valued at RM5.86 million, and Tan Lian Li (disposing 2% stake worth RM244,000), according to bourse filing. 

This is a related party transaction as the company’s non-independent and non-executive director Thoo Soon Huat also owns a 30% stake in Darwell.

In filing with Bursa Malaysia, Asia Poly said Darwin is principally involved in providing end-to-end solutions and technical expertise in telecommunications engineering and IT support services. These include providing comprehensive solutions for mission-critical facilities, including data centres, telecommunication exchanges, and command centres.

The agreement also came with a profit guarantee of RM1.63 million in earnings before interests, taxes, depreciation and amortisation for 12 calendar months with the verification based on the audited report for year 2024 and 2025.   

For the financial year ended Dec 31, 2023 (FY2023), Darwell reported a net loss of RM373,013, compared with a net profit of RM1.47 million the year before. Revenue also shrunk to RM2.91 million in FY2023 from RM11.94 million in FY2022, according to the filing to Company Commission of Malaysia. In FY2021, Darwell incurred a loss of RM320,996, with revenue totaling RM3.85 million, the filing shows. 

"The purchase consideration was arrived at on a “willing-buyer willing-seller” basis after negotiating based on price earnings ratio 7.5 (times), profit guarantee sum after taking into consideration the future prospects and earnings potential of Darwell," it added. 

Asia Poly, which holds a 10.53% stake in Dolphin International Bhd, added the acquisition will be funded using internally generated funds. Subject to unforeseen circumstances, the acquisition is expected to be completed within three months.

The company has been loss making for the past three years. 

Asia Poly’s shares fell half a sen or 4.55% at 10.5 sen on Thursday, valuing the company at RM100.64 million.