KUALA LUMPUR (Aug 24): Shareholders of Sunzen Group Bhd (KL:SUNZEN) have approved a deferral of the two-year profit-guarantee period tied to the group's acquisition of the remaining 30% stakes in Ecolite Biotech Manufacturing Sdn Bhd and Yanming Resources Sdn Bhd.
The resolution to vary the terms of the acquisition was passed unanimously at its extraordinary general meeting held on Monday, its bourse filing showed.
Under the revised terms, the two-year profit guarantee period has been pushed back from financial years 2025 and 2026 to 2027 and 2028.
This grants the vendors additional time to achieve cumulative profit after tax targets of RM10 million for Ecolite Group, a natural healthcare products manufacturer that also provides original equipment manufacturing (OEM) services, and RM3 million for Yanming, which is primarily involved in the processing and trading of edible raw and cleaned bird's nest products.
The variation also adjusts the timeline for the release of 60 million consideration shares held by a stakeholder as collateral under the guarantee mechanism.
The term "revision" was made after earnings of both companies were impacted by an outbreak of Newcastle Disease, which led China to temporarily halt imports of Malaysian bird's nest products between December 2024 and January 2025, alongside softer OEM demand in Malaysia, Singapore and Vietnam due to inflation and broader economic uncertainty.
Sunzen group managing director Teo Yek Ming said Ecolite and Yanming remain integral to the group's health products segment as Sunzen focuses on strengthening core operations across healthcare, medical devices and loan financing.
The group acquired the stakes in Ecolite and Yanming in 2024 for RM15 million and RM4.5 million, respectively. The acquisition was funded by the issuance of 66.1 million new Sunzen shares, of which 60 million were held back pending confirmation of the profit guarantees.
Shares of Sunzen ended flat at 22 sen on Monday’s market close, giving the group a market capitalisation of RM176.5 million.