NWP to diversify into sand dredging business

KUALA LUMPUR (July 26): NWP Holdings Bhd is venturing into the sand dredging business in a bid to expand its revenue stream.

In a statement on Tuesday (July 26), the group said its unit, NWP Marine Sdn Bhd, has inked a joint venture (JV) agreement with OneOne Auro Marine Sdn Bhd (OOA Marine) to undertake contractor work to dredge, transport and load marine sand from the concession area onto mother vessel(s) for export purposes and/or to local reclamation site(s) for reclamation purposes.

OOA Marine, a unit of OneOne Auro Sdn Bhd, is the holder of the service contract for dredging marine sand from the concession area.

Under the JV agreement, NWP Marine will own a 51% stake in the JV with OOA Marine owning the remaining 49%.

Commenting on the group's milestone, NWP non-executive chairman Datuk Tan Lik Houe said the JV operation has opened up a new range of possibilities for the group, which manufactures and trades a wide range of quality timber products, to expand its revenue stream and to venture into the sand dredging business that it hopes will drive its turnaround in the near term.

"We are excited with the new business' potential as it helps generate recurring cash flow and a steady income stream for the group," he said.

The group said it has also proposed to diversify the existing business activities of NWP to include sand mining, trading and export of sand, and related business activities. Besides that, it has also proposed a private placement of up to 10% of the total number of issued shares of the company.

It said diversifying into the sand dredging business would stand the group in good stead to expand its growth strategies over the next five years.

"In addition, since the business operations are low-risk, [and] as our role is to provide services for sand dredging operations and transport the sand to mother vessels, we are not exposed to the risks from the volatilities of oil prices and foreign exchange.

"Based on the current oil prices, the business operations are already operating with a healthy margin. This profit margin will expand once the oil prices normalise and moderate to a lower level," NWP executive director Tan Jyy Yeen said.

Shares in NWP traded half a sen or 1.92% higher at 26.5 sen at the time of writing, giving it a market capitalisation of RM140 million.