PETALING JAYA: Central Global Bhd (CGB) wholly owned subsidiary CIC Construction Sdn Bhd has entered into a sale and purchase agreement today with RYRT Holdings Sdn Bhd to acquire a 70% stake in RYRT International Sdn Bhd for RM30.1 million to be satisfied wholly via issuance of shares in CGB at the price of RM1.04.
As part of the acquisition, the group also entered into a profit guarantee agreement whereby RYRT Holdings guarantees that RYRT will achieve an aggregate audited profit after tax of RM43 million for a period of two years for the financial year ending Aug 31, 2022 (FY22) and FY23.
RYRT headquartered in Kota Kinabalu is an established infrastructure construction player with an extensive clientele. RYRT’s existing orderbook is RM262 million with contracts including, among others, a government project referred to as Project Lahad Datu Phase 1 involving the upgrading of water supply infrastructure in Lahad Datu, Sabah.
The acquisition is consistent with the vision and intention of CGB to expand its construction segment into infrastructure projects to create long-term revenue growth and income sustainability. During the signing ceremony, CGB managing director Chew Hian Tat said CGB had ventured into the construction segment in 2017 and it recently expanded its construction activities to include infrastructure projects.
“The opportunities from this sector is appealing to us. The acquisition of RYRT enables the group to establish a presence in the construction industry in Sabah.
“We are excited to include RYRT as part of our efforts to solidify our construction business segment, which will inevitably enhance our revenue and profitability moving forward. We see a huge potential in this company and this is an opportunity for us to embark with RYRT and elevate the company to another level – be it areas of its business, its approach and also its outlook.”
Malaysia’s construction sector is projected to turn around in 2022, following the continuation and acceleration of major infrastructure projects in Malaysia such as the LRT3, MRT3 as well as Pan Borneo Highways in Sabah and Sarawak.
Through this acquisition, the group can immediately create business synergies by combining its existing platform and network with RYRT’s existing orderbook.
Barring any unforeseen circumstances, the group expects this development to contribute positively towards its future earnings.
