PETALING JAYA: Integrated logistics services provider Xin Hwa Holdings Bhd is buying a 79% stake in Micron Metal Engineering Sdn Bhd for RM19.75mil from Hoon Eel An, Chia Ming How and See Kai Mun.

       Set up in 2004, Micron is a homegrown precision machining components and parts manufacturer.

       It focuses on the manufacturing and supply of shafts, precision parts and small metal attachments to the office automation, medical equipment and oil and gas industries.

       With nearly 20 years of experience in the industry, 89% of Micron’s revenue is derived from Malaysia in 2021 while the rest is contributed by exports to Singapore.

       It owns and operate two manufacturing premises in Ulu Tiram, Joho,r with total built-up area of 15,084 sq ft.

       The proposed deal will be satisfied via RM16.75mil cash, and 10.51 million new shares in Xin Hwa at an issue price of RM0.2855 per share based on the five-day volume weighted average market price, with the aggregate value of the shares amounting to RM3mil.

       The RM19.75mil valuation was arrived at on a willing-buyer willing-seller basis, after considering the cumulative profit guarantee of RM4.5mil in profit after tax provided by the vendors for three financial years (from 2002 to end-2024) which represents an implied forward price-to-earnings multiple of 16.7 times.

       Meanwhile, Xin Hwa has also granted a put option to the vendors for the sale of the remaining 21% stake at similar valuation, with the option period of two years effective from January 1, 2025.

       The proposed deal is expected to be completed in the third quarter of 2022.

       In a statement, Xin Hwa managing director Ng Aik Chuan said: “The proposed acquisition shall generate additional income stream to the group.

       “Micron has an established and robust financial track record for the past three financial years (ending Dec 31), while consistently generating positive net operating cash flow.”

       Ng added that the current leadership of Micron will remain and steer the company forward.

       Micron’s products are used in office automation as well as control valves used in the oil and gas industries and medical sector.