KUALA LUMPUR (April 30): WTK Holdings Bhd (KL:WTK) is selling its loss-making Sarawak unit Song Logging Company Sdn Bhd, which holds a logging contract for a 114,804-hectare forest area in Kapit, Sarawak, to Huang Qian Wen for RM23.5 million.

Song Logging has been the main logging contractor for Perbadanan Perusahaan Kemajuan Kayu Sarawak (STIDC), the timber licence holder, since 1976. The licence is valid until March 24, 2030.

Although Song Logging does not own the land or the licence, it operates under agreements with STIDC, which is the licence holder approved by the Forest Department and the Minister of Natural Resources and Environmental Sustainability.

WTK Holdings said in its filing with Bursa Malaysia that STIDC confirmed on Feb 24, 2025 that it has no objection to Song Logging continuing its contractor role after the change in shareholder.

WTK Holdings said the buyer of the company is a person domiciled in Sibu, Sarawak. No other information on her was provided.

The company said Huang will pay the RM23.5 million sum for Song Logging shares over a six-month period.

WTK Holdings expects to gain about RM22.08 million from the sale, based on Song Logging’s adjusted net assets of RM1.42 million. The company originally invested RM29.5 million.

Under the sale and purchase of shares agreement, Huang must settle all of Song Logging's debts and liabilities by April 30, 2025. All assets, including land, machinery, cash and receivables, as of that date will belong to Huang and can be transferred or assigned to related companies.

WTK Holdings said it is selling Song Logging to shift its focus to more profitable and sustainable business segments, prioritising its plantation and food operations due to their stronger growth potential.

It said the timber sector has seen declining revenue due to soft market demand and stricter certification requirements, making it less viable.

Song Logging has incurred a loss of RM6.49 million over the past three years, and there's no guarantee that its logging contract, which it has held with STIDC for 49 years, will be renewed after September 2025. Song Logging logged 74,638 cubic metres of timber in 2024.

WTK Holdings said the proposed disposal will help the group improve profitability by shedding non-core assets, enhance operational efficiency, and strengthen its financial position by boosting liquidity and working capital.

Shares of WTK Holdings closed up half a sen or 1.3% to 40.5 sen, valuing the company at RM194.9 million. The counter has declined 13.83% so far this year.