KUCHING: Shin Yang Group Bhd (SYGroup) is to acquire four companies, which are involved in car dealership business in Sarawak and Sabah, for a total of RM144.5 million. The proposed deal is a related party transaction.
SYGroup has entered into a conditional share sale agreement (SSA) with Shin Yang Holding Sdn Bhd (Shin Yang Holding), KTE Motors Sdn Bhd and Ling Chiong Sing to acquire 100 per cent equity interest in Boulevard Jaya Sdn Bhd.
SYGroup has also entered into a conditional SSA with Dwi Bumijaya Sdn Bhd to acquire 60 per cent equity interest in three companies: Boulevard Motor Sdn Bhd, Boulevard Motor (Sabah) Sdn Bhd and Boulevard Motor (Labuan) Sdn Bhd (collectively referred to as Boulevard Motor Group).
The total consideration of RM144.5 million for the proposed acquisition will be satisfied via a combination of cash and treasury shares held by the company, SYGroup said in a filing with Bursa Malaysia.
The Boulevard Jaya (100% equity interest) will be acquired for RM27.5 million, Boulevard Motor (60%) for RM72.24 million, Boulevard Motor (Sabah) (60%) for RM39.15 million and Boulevard Motor (Labuan) (60%) for RM5.61 million.
The four companies are collectively referred as “target companies”.
“The purchase consideration for the target companies of RM144.5 million will be satisfied via the transfer of 55.0 million treasury shares to the vendors and the balance in cash.
The cash portion will be funded via the company’s internally-generated funds.
“The treasury shares will be transferred to the vendors at the higher of (i) RM0.8514 per treasury share, being approximately 5.00 per cent premium to the 5-day volume weighted average price (VWAP) of ordinary shares in SYGroup up to an including 5 July 2024, being the latest practicable date prior to the date of the SSAs and this announcement (LPD) of RM0.8109 per SYGroup share or (ii) the 5-day VWAP of SYGroup shares up to and including the date prior to the transfer of the treasury shares to the vendors,” said SYGroup.
As at the LPD, the company holds 70,354,700 treasury shares.
Boulevard Jaya is an authorised dealer of Toyota vehicles in Sarawak and currently has a dealership agreement dated July 3, 2023 with UMW Toyota Motor Sdn Bhd.
Currently, Boulevard Jaya sells Toyota vehicles and parts and accessories and provide after-sale services and body and paint repair works for Toyota vehicles.
Boulevard Jaya is also an authorised agent of Lexus vehicles in Sarawak and has an agency agreement dated January 5, 2024 with UMW Toyota.
Shin Yang Holding owns 98.7 per cent (14,799,999 shasres) of Boulevard Jaya and the other shareholders — KTE Motors and Ling Chiong Sing have a stake of 1.3 per cent (200,000 shares and 0 per cent (1 share) respectively.
Boulevard Jaya posted an audited consolidated after-tax profit of RM4.7 million for financial year ended June 30, 2023.
Boulevard Motor commenced its operations in 2017 and is principally involved in the activities of retail of new motor vehicles and servicing and repairing of motor vehicles.
It is an authorised dealer and agent of Toyota vehicles in Sarawak. In financial year to December 31, 2023, Boulevard Motor recorded an after-tax profit of RM38.8 million.
Boulevard Motor (Sabah) is principally involved in the retailing of passenger and commercial vehicles as well as repairing and servicing of motor vehicles, and is an authorised dealer and agent of Toyota vehicles in Sabah.
Boulevard Motor (Sabah) registered after-tax profit of RM22.5 million for financial year ended December 31, 2023.
Boulevard Motor (Labuan) on the other hand is also principally involved in the activities of retailing of passenger and commercial vehicles and repairing and servicing motor vehicles.
The company is also an authorized dealer and agent of Toyota vehicles in Labuan.
In financial year to December 31, 2023, Boulevard Motor (Labuan) posted a consolidated after-tax profit of RM3.4 million.
Dwi Bumijaya shareholders are Melana Sinar Sdn Bhd, Kemena Sinar Sdn Bhd and Best Megalink Sdn Bhd, all with equal shareholdings of 33.33 per cent.
On the rationale for the proposed acquisition of the four motor companies, SYGroup said it is part of the company’s continuous efforts to improve shareholders’ value.
“The proposed acquisition entails the acquisition of companies with established businesses in the automotive industry and financial track record which will provide an immediate boost to the earnings of the group.
The proposed acquisition is expected to benefit the group in several ways.
It will diversify and enhance revenue streams, contributing positively to future earnings and strengthening financial performance.
Additionally, it will expand the group’s product offerings, reducing dependency on current businesses such as shipping, logistics, shipbuilding, and industrial gas manufacturing.
The group plans to use the target companies’ networks and client bases to crosssell its shipping services, including containerised freight transportation, port-to-port services, haulage, customs clearing, and other port-related services under the “SYGroup” franchise.
This strategy aims to boost market presence and service integration.
Furthermore, the acquisition will allow the group to integrate the target companies’ automotive maintenance and repair services into its own workshops and stores, achieving operational cost savings and increased efficiency.
Overall, the acquisition will strengthen the group’s market position and operational capabilities.
Commenting on the outlook of the Malaysian automotive industry, SYGroup said sales of motor vehicles in 2023 rose 11 per cent to a new all-time high, propelled mainly by passenger cars subsegment, and a resilient domestic economy and a very much stable socio-political environment.
According to the Malaysian Automotives Association, total industry volume or vehicle registration in 2023 increased to 799,731 units, suprassing the previous highest sales result of 721,177 units achieved in 2022.
According to the association, SYGroup said Toyota cars have been among the best-selling cars in Malaysia, and commanded more than 10 per cent of the market share for each of the calendar year from 2020 to 2022.
“The new Toyota models launched in late 2023 (such as Toyota Alphard, Toyota Vellfire and Toyota Corolla) and Toyota focus on introducing more models in 2024, particularly with an emphasis on XEV technologies, coupled with its strong brand reputation and broad appeal to the mass market, would bode well in attracting sales for Toyota.
“Being a Toyota dealership and agent, these positive traits support the positive outlook that the target companies could offer to SYGroup, such as improving its financial performance.
“In addition to the recent reports by reputable international financial news agency regarding the support from the Japanese government to Toyota of up to 117.8 billion yen (approximately US$841 million) in subsidise for its investment in EV battery production, Toyota aims to introduce 10 additional EV models by 2026,with a target to achieve annual sales of 1.5 million units in 2026 and 3.5 million units in 2030,” added the company
