ACE Market listed Artroniq Bhd (formerly Plastrade Technology Bhd) is making a foray into the precision engineering field – a diversification at the right timing given the company is currently relying on its single business as a service provider in the information communications technology (ICT) realm.

The cutting-edge ICT outfit had on Friday (July 15) inked a conditional sale and purchase agreement to acquire 60% equity interest in precision engineering company Fujim Digital Sdn Bhd for RM12 mil.

The proposed acquisition comes with a profit guarantee of not less than RM2.1 mil for each period of May 1, 2022 to April 30, 2023 and May 1, 2023 to April 30, 2024 respectively.

“We are looking forward to complete the acquisition of Fujim Digital which will put us into the precision engineering business,” commented Artroniq’s managing director and CEO Chin Yew Thong.

“The exercise will help the group to reduce its reliance on a single business as well as to provide a new income stream as we aim to participate in the robust growth of the engineering supporting services industry.”

Currently, the ICT business is Artroniq’s sole revenue contributor following cessation of its manufacturing business of resin compounds for wire and cable and resin compound for other industries on Sept 22, 2020.

“The alternative income stream for the group will help to rejuvenate Artroniq’s recovery in the post-COVID era,” noted Chin.

He also expressed optimism that Artroniq’s shareholders share similar excitement as the management on the potential of the high precision machineries industry, hence will vote in favour of the proposed acquisition during the company’s upcoming extraordinary general meeting (EGM).

A filing with Bursa Malaysia shows that the proposed acquisition which entails the acquisition of 156,000 ordinary shares in Fujim Digital from Teoh Boon Thiam will be satisfied via RM6 mil cash with the balance settled via issuance of new ordinary shares of the company.

Fujim Digital is a Penang-based company involved in precision engineering, particularly in trading, manufacturing, and design of jigs and fixtures, precision tooling component, machinery parts, and related products, and research and development (R&D) with mechanical suppliers. It also provides a one-stop fabrication solutions from design to production, equipment tools, and support to satisfy assembly needs.

Meanwhile, Teoh who is Fujim Digital’s shareholder said Artroniq’s participation will accelerate the company’s expansion plan.

“The precision engineering industry has a robust growth outlook and will see huge demand as the global economy recovers from the pandemic,” he pointed out.

As a key supporting industry to the manufacturing sector, the outlook of precision engineering is positive with its strong demand. Fujim Digital currently supports various industries such as the information technology, semiconductor, and automotive industries. The company has a wide customer base, including both the local and international market.

Very recently, Fujim Digital was included as an approved vendor to tender for new contracts with three multinational companies operating in the automotive (China), lighting (Europe), and semiconductor and microchip industries (the US).

Going forward, Fujim Digital is also looking to expand its product offerings to cater to customers operating in the oil & gas (O&G) industry. This will allow the group to tap into a wider customer base and create a more sustainable income stream.

At 2.38pm, Artroniq was up 1.5 sen or 3.33% to 46.5 sen with 1.29 million shares traded, thus valuing the company at RM148 mil. – July 18, 2022

Author: Focus Malaysia
Source credit: focusmalaysia.my