Mainboard-listed InnoTek, through its wholly-owned subsidiary, Mansfield Manufacturing Company Limited, has disposed of its 70% stake in Hua Yuan Sheng Industrial Company Limited.
The company entered into a sale and purchase agreement (SPA) with HuaYuanSheng Metal, Plastic and Electronic Limited on Sept 30, where InnoTek will sell Hua Yuan Sheng Industrial Company for US$500,000 or $646,000.
The consideration was based on Hua Yuan Sheng Industrial’s net tangible asset value as at July 31 and after negotiations between the parties.
According to InnoTek, Hua Yuan Sheng Industrial has been loss-making. In the financial years ending Dec 31, 2023, and Dec 31, 2024, Hua Yuan Sheng Industrial made a loss of $991,000 and $1.02 million respectively.
As disclosed in InnoTek’s unaudited condensed interim financial statements for the six months ended June 30, Hua Yuan Sheng was facing a decline in export orders. Given the latter’s current performance and challenging market conditions, InnoTek does not expect Hua Yuan Sheng Industrial’s business performance and financial position to see a “significant turnaround”. “The proposed disposal will enable the group to strengthen its balance sheet and improve its liquidity.”
The completion of the disposal is subject to obtaining the relevant approval from the relevant governmental authority in Vietnam, says InnoTek.
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On a pro forma basis, if the disposal had been completed on Jan 1, 2024, InnoTek’s earnings per share (EPS) would have been at 1.90 cents from 2.51 cents originally.
Its consolidated net tangible assets (NTA) per share attributable to shareholders would have been at 75.15 cents from 75.16 cents if the disposal was completed on Dec 31, 2024.
In line with the disposal, InnoTek has sought a waiver from the Singapore Exchange Securities Trading Limited (SGX-ST) to comply with Rule 1014 (2) of the listing manual, where InnoTek must seek its shareholders’ approval. The waiver was granted, according to the company’s Oct 1 filing.
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According to InnoTek, the proceeds from the proposed disposal will be used for working capital purposes and to undertake new investment opportunities that may arise in future.
Shares in InnoTek closed 0.5 cents lower or 1.09% down at 45.5 cents on Sept 30.
