KUALA LUMPUR (May 16): Magma Group Bhd (KL:MAGMA) said it has signed a partnership with Nasdaq-listed Chagee to tap the Chinese premium tea chain business in Malaysia.
A joint venture (JV) company, Chagee Magma Sdn Bhd, in which Chagee owns 60% and Magma 40%, has been formed to operate the chain’s business in the country and undertake the expansion, according to an exchange filing by the hotelier on Friday.
“The JV company will serve as the primary vehicle for executing business expansion and operations, which include, among others, the development of branded retail outlets and other commercial initiatives within the premium tea and beverage segment,” Magma said.
The target over the next three years is to open 300 directly managed outlets across Malaysia, Chagee’s largest market outside of China.
The JV and subscription agreements were signed by Magma’s wholly owned unit, Magma Chain Management Sdn Bhd, with Chagee (M) Sdn Bhd. A check with the Companies Commission of Malaysia showed Chagee (M) is 51% owned by Chagee Group (Sea) Pte Ltd and 49% by Brew Wealth Venture Sdn Bhd.
The JV is in line with Magma’s vision to diversify into high-growth lifestyle and consumer segments in its bid to create new revenue streams, said chief executive officer Datuk Seri Thomas Liang Chee Fong.
“The partnership leverages Chagee’s proven operational excellence and strong consumer appeal… alongside Magma’s deep expertise in local market development and execution,” said Liang. “Together, we see substantial opportunities to capture significant value within Malaysia’s premium tea market.”
Magma’s equity participation in the JV will be funded via internally generated funds. The company, which oversees three Impiana hotels domestically and some partially owned hotels abroad, has been in the red for 12 consecutive quarters.
Net loss was RM34.74 million on negative revenue of RM4.38 million for the fourth quarter ended Dec 31, 2024 (4QFY2024), according to Magma's latest available quarterly results.
At the noon break, shares of Magma were up half a sen or 1.25% at 40.5 sen, valuing the company at RM672.11 million.