KUALA LUMPUR (May 13): Tanco Holdings Bhd (KL:TANCO) has been questioned by Bursa Malaysia over its joint venture (JV) with Hong Kong-based King Well Holdings Ltd (KWHL) as it seeks to pivot into the concrete products manufacturing business.
The exchange's inquiry follows a period of heightened scrutiny on the group, which was hit with an unusual market activity (UMA) query following a sharp spike in its share price.
The JV, announced two days ago, involves Tanco’s unit entering into a joint venture and shareholders’ agreement with KWHL to manufacture and supply concrete-related products in Malaysia. The venture will be housed under a JV company, with Tanco holding a 51% controlling stake and KWHL the remaining 49%.
According to Tanco's filing on Wednesday, Bursa sought details on KWHL’s ownership, management, and business profile as well as key audited financial information over the last three years.
In response, Tanco clarified that KWHL is a special purpose vehicle recently acquired by Wang Gang, which currently functions as an investment holding firm with no significant financial track record. Its business scope includes investment management, information consulting, import and export trade, and wholesale and retail.
Identifying the partner
On how the partnership was formed, Tanco said initial contact with KWHL was established through Wang's former role at Jian Hua. He was introduced to Tanco by CCCC Dredging (Group) Co Ltd during joint meetings for the Midport project, which led to discussions on a private collaboration for port construction materials.
Bursa also asked Tanco to justify the JV, given its existing heavy commitments, particularly the Midport Project — which carries an engineering, procurement and construction contract of up to RM3.5 billion — and the Port Dickson Free Zone development, where Tanco is solely responsible for funding.
Tanco said the JV would allow it to leverage Wang’s extensive industry experience, reducing research and development time and costs. Having an in-house supply of concrete products — including large-sized sea piles critical for port construction — would also deliver immediate and long-term cost efficiencies, while mitigating exposure to price volatility and supply disruptions.
"This is a proactive initiative by Tanco to mitigate and to manage the impact of global uncertainties, such as price volatilities, for example diesel and fuel related products today," it said, adding the JV would also provide a new platform to market and sell such products to third parties.
Feasibility and regulatory matters
Tanco said the proposed manufacturing facility is expected to be located in Dickson Bay, Port Dickson, on land owned by the group, and will produce a range of concrete-related products for relevant industries.
A four-month feasibility is currently underway, led by KWHL, covering key areas including market overview, customer demand, competitive landscape, marketing strategy, investment costs, and risk assessment and mitigation. KWHL will bear all costs associated with the study.
The venture also remains subject to regulatory approvals from the Companies Commission of Malaysia, Malaysian Investment Development Authority (Mida), Ministry of Investment, Trade and Industry (Miti) the Port Dickson municipal council, the Construction Industry Development Board (CIDB), and the Standard and Industrial Research Institute of Malaysia (Sirim).
Shares of Tanco closed one sen or 0.59% higher at RM1.70 on Wednesday, valuing it at RM10.43 billion. The stock has rallied over 80% in the past one year.