This article first appeared in The Edge Malaysia Weekly on August 10, 2026 - August 16, 2026

The best years for Tong Herr Resources Bhd (KL:TONGHER) were during the Covid-19 pandemic in 2021 and 2022. The global supply disruption caused a rush for its fasteners that led to record-high profits.

Since 2023, however, it has been downhill for Tong Herr. The combination of the rising cost of doing business in the domestic market and the trade war between the US and China has had an impact on its business.

The company, whose owners are from Taiwan, exports a substantial portion of its products to the US, China and Europe. The US tariff on its goods has crimped its margins. The higher energy cost in Malaysia, following the government’s subsidy rationalisation, has also had an adverse impact on its margins.

Tong Herr’s profits have been down since 2023, with its net margin narrowing to about 1.5%. During its best years, its gross profit margin was well above 15% and net margin more than 8%.

So, it comes as no surprise that the major shareholders have proposed to take the company private via a selective capital reduction (SCR) exercise, offering RM2.55 per share. The proposal must be approved at an extraordinary general meeting, with the support of at least 75% of the independent shareholders voting and up to 10% of the independent shareholders voting against it.

The major shareholders Allrich Corp and Richard Holdings Ltd control 74.5% of the company. Based on the offer price of RM2.55 per share, the proposers — which are the Tsai family from Taiwan — would need to fork out RM99.8 million to take up the rest of the shares held by independent shareholders.

Tong Herr is sitting on cash of RM163.7 million and has borrowings of less than RM11 million. The company also owns several parcels of industrial land in Penang, where its factories are located.

There is no denying that the Tsai family wants to take Tong Herr private to restructure the business. The question is: How many more companies operating in a similar environment will follow suit?

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