KUALA LUMPUR (Oct 2): Sunzen Biotech Bhd (KL:SUNZEN) said on Wednesday that it has identified another potential target for acquisition that could help accelerate growth of the company, which mainly makes supplements.

A potential target is a local company in the finance industry, according to Sunzen executive chairman Ching Chee Pun. A deal could be reached by next year, which could complement its businesses that also include providing loans to small and medium enterprises (SMEs), he said.

Acquisitions would offer “a faster growth path compared to organic growth,” Ching said. “Therefore, if we identify a suitable target, we are prepared to move forward with an acquisition.”

Ching was speaking at a press briefing on the acquisition of a 70% stake in Eye Nation Medical Sdn Bhd that sells ophthalmic products.

Sunzen has cash and cash equivalents of RM27.65 million as at end-June 2024, according to its latest financial statements. On the other side of the balance sheet, its loans and borrowings stood at RM6.49 million, and the company also has payables and liabilities of nearly RM13 million.

Sunzen expects to see stronger profit for its financial year ending June 30, 2025, following recent acquisitions. Net profit totalled RM9.17 million, on the back of a revenue of RM142.7 million for the 18 months ended June 30, 2024.

The company previously changed its financial year-end to June 30, from Dec 31.

Sunzen’s two main business divisions are human health products under Ecolite Biotech Manufacturing Sdn Bhd and loan financing services under Finsource Credit (M) Sdn Bhd. Ecolite Biotech also owns a 70% stake in Yanming Resources Sdn Bhd, a Puchong-based bird’s nest processor and exporter.

On Tuesday (Oct 1), Sunzen announced plans to venture into the ophthalmic industry through the acquisition of a 70% stake in Eye Nation, for a cash consideration of RM6.37 million.

The acquisition comes with a profit guarantee, with Eye Nation expected to achieve an audited net profit after tax of RM2.6 million for the financial years commencing July 1, 2024 and ending June 30, 2026.

In December last year, the group announced acquisition of the remaining 30% stake in Ecolite Biotech and a 30% stake in Yanming, for RM19.5 million. The acquisitions were paid through a share issuance of new 66.1 million Sunzen shares at 29.5 sen each.

Ecolite Biotech is providing a two-year profit guarantee of RM10 million, while Yanming shall achieve a cumulative audited profit after tax of not less than RM3 million over the next two years.

At noon market break on Wednesday, shares of Sunzen were unchanged at 34.5 sen, giving the company a market capitalisation of RM253 million. Over the past one year, the stock has gained 68%.