Press Releases

• Bolt-on acquisition of Toyoplas Manufacturing (M) Sdn Bhd and its subsidiaries further fortifies Group’s position as a major player in integrated plastic injection moulding industry
• Acquisition expected to contribute positively to Perangsang Selangor’s financial performance from 3Q19 onwards

Kuala Lumpur, Malaysia, 17 May 2019 – Kumpulan Perangsang Selangor Berhad (“Perangsang Selangor” or “the Group”) (KPS, Bursa: 5843; Bloomberg: KUPS:MK; Reuters: KPSB.KL) via its subsidiary, Perangsang Dinamik Sdn Bhd, has entered into a conditional Share Sale Agreement with Toyoplas Consolidated Limited for the proposed acquisition of 100% equity stake in Toyoplas Manufacturing (Malaysia) Sdn Bhd (“TMM”) and its subsidiaries (collectively “TMM Group”) for RM311.25 million. This acquisition, which is expected to be completed by the third quarter of 2019, requires vote of approval from Perangsang Selangor’s shareholders, to be sought at an extraordinary general meeting which will be convened in the immediate future.

Overarching the proposed acquisition is the long-term prospect of the global plastic injection moulding market, which was valued at USD326 billion in 2018 and is expected to expand at a CAGR of 5.7% through 2025. The growing demand for plastic components from various underlying industries including packaging, home appliances, automotive and medical devices is anticipated to sustain the growth. In 2018, about 37% of global demand originated from the Asia Pacific region (source: Global Injection Moulded Plastics Market Industry Report, 2019– 2025).

Marking Perangsang Selangor’s second, yet bigger entry into the plastic injection moulding business after CPI (Penang) Sdn Bhd (“CPI”), the acquisition of TMM provides the Group with greater regional presence and stronger brand positioning as an integrated plastic injection moulding solutions provider. It boasts a strong multinational clientele from the volume-based consumer appliances sector as well as communications & multimedia and automotive sectors, with value chain spanning over 75 countries globally.

The purchase consideration of RM311.25 million, which values the acquisition within the industry benchmark in terms of Enterprise Value to Earnings Before Interest, Tax, Depreciation and Amortisation (“EV/EBITDA”) and Price to Earnings (“P/E”) ratios of 5.23x and 8.66x respectively, will be fully satisfied by internally generated funds and borrowings. The transaction will be funded by a mixture of equity and term loan, each amounting to RM161.25 million and RM150.0 million, respectively.

Having full range of expertise, TMM is involved in the plastic injection moulding business with an integrated capability from mould fabrication, precision injection moulding and secondary processes to full assembly of parts or products. A one-stop solutions provider to its clients, TMM operates from seven manufacturing plants of over 1,000,000 square feet across three countries, i.e. Shanghai, Dongguan and Nanning in China; Ulu Tiram, Muar and Senai in Malaysia; and Jakarta in Indonesia, enjoying a wide customer base from diversified sectors.

TMM’s proven capabilities contribute towards its track record in retaining customers - most of whom have been with the Company between 8 and 21 years - allowing it to benefit from their product developments and business growth. Its key customers are industry market leaders and multinational companies in their respective sectors. In recognition of its service excellence, the Company has bagged numerous recognition awards from its customers over the years. The Company also holds various international quality management certifications such as ISO13485:2003, ISO14001:2004 and ISO9001:2008.

Ahmad Fariz Hassan, Managing Director / Group Chief Executive Officer of Perangsang Selangor said:

“In addition to this acquisition being value-accretive and cash generating, TMM is chosen for its excellence in quality. Other determinant factors are its geographical, sectoral and product diversity, as well as its being of mature industry, all of which provides TMM with the resilience to swings in economic cycles. Coupled with the proven track record as a result of sound business acumen of the management team, these would strengthen Perangsang Selangor’s position in the marketplace further.”

In addition to enhancing business focus, the acquisition will unlock full potential of Perangsang Selangor’s plastic injection moulding business as well as provide further synergy within the Group via TMM’s complementing CPI’s business dynamics. Potential synergy is expected in the areas of client sourcing and combined procurement of raw materials, and envisaged to improve overall business efficiency and optimise costs for both entities.

TMM Group has recorded stable revenue growth with a CAGR of 5.8% between 2015 and 2018 while expanding its profitability margins. It closed FY2018 with a revenue of USD109.1 million. Upon the completion of the acquisition, it is expected to contribute positively to Perangsang Selangor’s financial performance from the third quarter ending 30 September 2019 onwards.

“We are also optimistic for its prospect given its current position in the industry, which will pave the way for capacity expansion, entrance into new markets and industry, and enlarged customer base, all that while providing geographical diversification for the business,” he added.

Chairman Lim Lai An founded TMM Group in 1997 from a decent start in Indonesia, which then expanded to the present group of companies with manufacturing and trading activities across seven business entities in five countries. The previous shareholders have built TMM Group to the manufacturing powerhouse it is today complete with a team of experienced technical experts. Post-acquisition, Perangsang Selangor intends to retain the senior management team of TMM Group.

In ensuring a smooth transition with the change of owners, the Group is committed to maintaining the superior quality that TMM has consistently delivered to its customers throughout the years. Key drivers to its historical growth are the continuous exploration and investment in resources for capacity expansion and driving improvement in TMM’s operational efficacy and efficiency.

“The bolt-on acquisition of TMM is a quintessential example of the Group creating further value to its shareholders by enlarging the earnings base, ultimately generating sustainable and greater returns for all its stakeholders. In a larger scheme of things, the acquisition is a competitive strategy that will create economies of scale, increase control over supply and value chains, and help expand the Group’s existing business and enter new markets, while maintaining geographical and customer base diversification,” Ahmad Fariz concluded when elaborated on the strategy behind the proposed acquisition.

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About Kumpulan Perangsang Selangor Berhad (www.kps.com.my)

Incorporated on 11 August 1975, Kumpulan Perangsang Selangor Berhad (“Perangsang Selangor” or “the Group”) is a public limited liability company listed on the Main Market of Bursa Malaysia Securities Berhad under the Industrial Products & Services Sector. Perangsang Selangor has focused investments in four core sectors namely, the Manufacturing, Trading, Licensing and Infrastructure. While strengthening our business to optimise returns, Perangsang Selangor is committed to providing significant contributions towards sustainable development in the areas of economic, environment and social for the benefits of all stakeholders.

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