KUALA LUMPUR (March 7): WTK Holdings Bhd (KL:WTK) has proposed for the sale of its entire equity interest in two loss-making units for a combined RM40.35 million in cash, as part of the company’s strategy to focus on more commercially sustainable and profitable business segments.

The disposals are expected to generate a gain of RM26.96 million for WTK, with the proceeds allocated for working capital, including payments to suppliers and creditors as well as operational and administrative expenses, said the timber harvester and product maker in a bourse filing.

WTK has entered into sale and purchase agreements with Huang Qian Wen for the disposals of Piramid Intan Sdn Bhd (PISB) and Immense Fleet Sdn Bhd (IFSB) for RM16 million and RM24.35 million respectively.

PISB is primarily engaged in the extraction and sale of timber and logs products, while IFSB is involved in timber trading, reforestation, planting, management of oil palm plantation and sales of fresh fruit bunches in Sarawak.

WTK explained that the timber segment has experienced a declining revenue contribution in recent financial years due to soft market demand and stricter operational requirements related to timber certifications.

PISB incurred a combined loss after tax of RM5.25 million for the past three years from FY2022 to FY2024, while IFSB’s loss after tax totalled RM51.85 million during the same period. The group’s financial year ends on Dec 31.

WTK said the proposed disposals will enable the group to optimise its assets portfolio, allowing it to prioritise its plantation and food operations, which have demonstrated stronger growth potential and profitability in recent years.

The proceeds from the disposals are expected to improve the group’s balance sheet and financial stability, it noted.

The disposals, which are not subject to shareholders’ approval, are expected to be completed in the third quarter of 2025.

WTK is a diversified group with four main core business segments, namely timber, plantation, tapes and food. It has been making losses over the past seven years between FY2018 and FY2024, its annual report showed. 

From a loss after tax of RM1.76 million in FY2018, its financials worsened to RM114.22 million in FY2019 and RM162.87 million in FY2020.

Though the net loss position were reduced to RM8.2 million in FY2021 and RM2.55 million in FY2022, it deteriorated again to RM19.29 million and RM43.22 million in FY2023 and FY2024 respectively.

WTK’s share price closed unchanged at 42.5 sen on Friday, bringing the group a market capitalisation of RM205 million.