Media Clippings

14 Oktober 2019

Kumpulan Perangsang Selangor Berhad (“Perangsang Selangor” or “the Group”) (KPS, Bursa: 5843; Bloomberg: KUPS:MK; Reuters: KPSB.KL) expects to enhance its profitability on an enlarged earnings base with the recent acquisition of Taspack Industrial Sdn Bhd (“Taspack” or “the Company”). Taspack is involved in an end-to-end production of offset carton boxes and in the provision of instruction manuals printing for the manufacturing sector. The acquisition provides further inroad for the Group with greater presence and stronger positioning as an integrated packaging solutions provider.

The 85% equity stake in Taspack was acquired by Perangsang Selangor’s subsidiary Century Bond Bhd (“CBB”). Via the latter’s wholly owned subsidiary, Polyplus Packages (JB) Sdn Bhd, CBB entered into a conditional Share Sale Agreement with the owners, Dato’ Lim Kian Tiong (“Dato’ Lim”), Teo Kim Yan (“Teo”) and Soo Yin Seong (“Soo”), each releasing 40%, 18% and 27% respectively of their shares in Taspack for a total sum of RM21.25 million.

The purchase consideration, which values Taspack in line with 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 3.5x and 5.9x respectively, will be fully satisfied by internally generated funds.

Incorporated in 1990, Taspack started as a trading company, taking orders from multinational corporations (“MNC”) for printing of manuals and packaging products. In 2000, Taspack changed its business model from trading to manufacturing by acquiring Crestar Printers Sdn Bhd and subsequently started its own offset carton printing operation two years later.

Dato’ Lim who holds 50% stake in Taspack is the current Managing Director of the Company. He is involved in overall performance of Taspack. Teo, who holds 20% stake in the Company, is the Operation Director. The remaining 30% stake is owned by Soo, who holds no position in Taspack. Post-acquisition, Dato’ Lim and Teo will continue in managing the day to day operations of Taspack.

Presently, Taspack runs on about 90,000 square feet manufacturing factory producing end- to-end offset carton box packaging and manual printing in Ulu Tiram, Johor. Offset cartons are boxes with the outer layer laminated by a finer and more vibrant printed sheet. The stages of the production of an offset carton involves the design & development from customers, computer-to-plate, printing, laminating and die-cutting. Examples of the products include tissue boxes, display for food items such as layer cakes and electrical goods such as coffee machines and telephones.

Manual printing, which usually accompanies electrical and electronics (“E&E”) products such as telephones and coffee machines, contains information such as steps in using the products, technical information, warning and troubleshooting guide. Somewhat like offset carton, the stages of production of an instruction manual starts with design and development from customers, plating, printing, folding and ends with stitching and binding.

Perangsang Selangor’s Managing Director and Group Chief Executive Officer, Ahmad Fariz Hassan said,

“This acquisition fits well into the sustainable business development plan for CBB. The horizontal integration within CBB’s core business will provide us with the platform to move towards higher margin product, optimising the product mix of the respective segment value chain. It will greatly enhance its capabilities in the midstream production of carton box division and downstream services of design and printing, hence opening greater possibilities for existing and potential new customers. This integration is also expected to result in a long- term synergy in the procurement of single facer machines with Hongda Century Packing and Printing Sdn Bhd.”

With its business function supported by about 150 staff, 20 of which are from management and administration teams, sales from the carton packaging division contributed the biggest chunk to Taspack’s revenue in 2018 with RM21.6 million, or 69.2%. The balance contribution of RM9.6 million, or 30.8%, was from the instruction manual division. Taspack has made conscious effort to grow this business segment by adding more printing capacity to support growth in customers’ demand. Although commanding slightly higher margin, the instruction manual printing business remains complementary to Taspack’s revenue contribution.

The acquisition is expected to contribute to Perangsang Selangor’s earnings from fourth quarter 2019 onwards. CBB was the largest contributor to Perangsang Selangor’s revenue for the financial year ended 31 December 2018 with RM189.9 million sales, representing 32.6% of the Group’s total revenue of RM582.3 million. Perangsang Selangor owns 100% equity stake in CBB.

“This strategic move will see CBB realising its vision towards becoming an integrated packaging solutions provider, by moving up the value chain, focusing on more value-added products, targeting new domestic customers as well as MNCs, and potentially capturing new market segments in the immediate future,” Ahmad Fariz concluded.

https://focusmalaysia.my/Snippets/kps-to-acquire-taspack-for-rm21-25m