MESB eyes waste recycling business in bid to return to profit

TheEdge Fri, Jan 15, 2021 07:06pm - 3 months ago

KUALA LUMPUR (Jan 15): MESB Bhd plans to venture into the waste recycling business as it sees its loss-making trading and retailing of apparel and leather products business will continue to face challenges amid the Covid-19 pandemic.

The group said the waste recycling business has a favourable outlook to enhance its prospects and financial performance, as well as to reduce its sole dependency on the existing business.

“On the basis that MESB group registered a loss of approximately RM26.78 million for its existing business for the financial year ended June 30, 2020 (FY20), and barring any unforeseen circumstances, the proposed diversification is reasonably expected to contribute more than 25% of the net profits of the group and may result in a diversion of more than 25% of the net assets of the group to an operation which differs widely from its current operations,” it said in a bourse filing today.

It will seek the approval of its shareholders at an extraordinary general meeting to be convened.

MESB said the new venture will be spearheaded by its director and major shareholder Wong Sak Kuan, who has extensive experience in the recycling industry in Malaysia. He emerged as the controlling shareholder of MESB with a combined equity interest of 44.14% pursuant to a mandatory takeover offer that was completed on Nov 2 last year.

Wong is also a director and major shareholder of Main Market-listed Lotus KFM Bhd.

“Although the board of directors acknowledges that the group does not have any prior involvement in the waste recycling business, it will leverage on the expertise and extensive experience of Wong in the recycling industry. 

“Premised on the foregoing and barring any unforeseen circumstances, the proposed diversification and coupled with the continuous efforts of the management of MESB to turn around the performance of the group’s existing business, the group is expected to be in a stronger financial position moving forward and delivering value to its shareholders,” said MESB.

MESB shares fell one sen or 2.3% to close at 42 sen, giving a market capitalisation of RM44.56 million.

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