KUALA LUMPUR (April 15): Loss-making Scope Industries Bhd (KL:SCOPE) is disposing of its wholly owned manufacturing unit to Singapore-based Luxshare Precision ingapore Pte Ltd for RM96.7 million.
In a filing with the exchange on Tuesday, Scope Industries said it had entered into an agreement with Luxshare for the disposal of its entire stake in Scope Manufacturers (M) Sdn Bhd (SMSB).
Scope Industries said it has been primarily involved in the manufacturing business via SMSB. However, rising competition and increasing production costs have squeezed profit margins, leading SMSB to report losses over the past three financial years and the latest six-month period.
Given these challenges, the disposal presents an opportunity for the group to divest and unlock the value of its manufacturing business.
Of the RM96.7 million in proceeds, Scope Industries said it plans to earmark RM50 million for the expansion of its plantation business and RM23.1 million to pay a special interim dividend to shareholders.
The remaining balance will be allocated for general working capital and expenses related to the proposed disposal.
Scope Industries expects to record a gain of about RM24.2 million from the transaction, which will enhance its net assets and earnings.
Following the disposal, the group intends to redirect its financial resources towards its plantation and trading businesses. It also aims to explore new business opportunities with Luxshare through its trading division.
The disposal is expected to be completed by the third quarter of this year.
For the second quarter ended Dec 31, 2024, Scope Industries posted a net loss of RM271,000, compared to a net profit of RM87,000 a year earlier. The decline was attributed to lower sales volume in the manufacturing segment and the absence of revenue in the trading segment due to insufficient working capital.
Quarterly revenue fell 76% to RM9.76 million from RM41.4 million in the previous corresponding period.
Shares in Scope Industries rose two sen or 21% to close at 11.5 sen on Tuesday, valuing the Perak-based company at RM132.8 million.