Leading manufacturers of rubberwood furniture in Malaysia, Sand Nisko Capital Bhd (“SNC” or “Group”) is looking to create alternative income streams through potential mergers & acquisitions (M&As) of environmentally friendly businesses involved in the bio fertiliser and refined-oil products.
Bio fertiliser provides better efficiency and output for trees, while refined-oil is a recycled oil product that is reproduced as a lubricant and addictive oil and biodiesel for the automotive industry.
SNC’s newly appointed Executive Director, Dato’ Goh Soo Wee & Mr Lee Ping Wei said, “We like environmentally friendly business due to its positive impact on the environment and preserves natural resources. The potential M&As in this space is also in line with our sustainability mission – prevent physical waste, improve resource productivity, improve profitability and enhance competitiveness.”
According to Dato’ Goh, the Group has targeted companies with vast experience and a strong track record in this area. This will allow SNC to gain immediate exposure in an industry with a high entry barrier.
“One of the biggest challenges to gaining exposure in these businesses is technical expertise and know-how. The company we are looking for offers us the mechanics to move forward in the business as they have a strong team with strong credentials in the field. The company also has machinery in place for both the bio fertiliser and refined-oil business. So instead of investing in the knowledge and building our own capacity, these M&As puts SNC on a fast track to expand into the business,” Mr Lee added.
Aside from that, the penetration into these businesses will target a new customer base for the Group as the bio fertiliser targets both plantation companies and government agencies. Similarly, the refined-oil business will meet the demand in the automotive industry.
“We will explore new sales channels and customers under the new expansion. Among the target customers include the plantation companies, both private and government agencies and those in the automotive industry. Based on our research, bio fertiliser is in strong demand, especially among plantation companies and government agencies looking for higher yields in the crops and reducing the feritlising cost. Meanwhile, the refined-oil is suitable for customers who need quality base oil to reproduce into final products,” he said.
These M&As could be synergistic expansions for the Group as SNC has a strong balance sheet position with net cash that meets the funding needs to grow the business.
According to Dato’ Goh, the Group will allocate up to RM50 million for capital expenditure (“CAPEX), which would involve investment into new or upgrading machinery to grow the businesses,” Dato’ Goh said.
“Our strong balance sheet position is an advantage that can help grow the business. Given the inflationary environment, we think it is important for the Group to put our money into better investing opportunities. With the potential M&As, it puts us on a strong growth trajectory while allowing us to gain exposure to new business. Aside from that, these potential M&As is also in line with our Group’s ESG (environment, social and governance) mission,” Mr Lee said.
This content is provided by Aegis Communication Sdn Bhd.
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