KUALA LUMPUR (Oct 16): Shares of Malayan Flour Mills Bhd (KL:MFLOUR) fell to their lowest in more than five months on Wednesday, following an announcement that the company would not be getting a second earnout payment from a stake sale.

Malayan Flour fell as much as 7.7% or 5.5 sen to 65.5 sen, its lowest since May 2024. The stock ended the day at 67.5 sen, giving the company a market capitalisation of RM836 million. Trading volume totalled over 10 million shares, more than triple the 200-day moving average.

AmInvestment Bank is the sole research house covering the stock. It has a ‘buy’ call on Malayan Flour and target price of 87 sen when it was reviewed on Sept 18.

Shares of Malayan Flour — which counts managing director Teh Wee Chye as its largest shareholder with a 16.07% stake — have risen to peak at 91 sen on June 12 thanks to strong earnings growth before paring gains. Year-to-date, the stock is still up 5.5%.

On Tuesday, the company said it would not get second earnout payment from Tyson Foods Inc for its 49% equity disposal in Dindings Tyson Group to Tyson Foods due to shortfall in targeted earnings.

The total consideration for the disposal of its 49% equity stake in Dindings Tyson amounts to RM289.916 million, from its initial payment and the adjusted first earnout consideration, instead of RM420 million if all disposal considerations were met.

In 2021, Malayan Flour announced the sale of its stake in Dindings Tyson, formerly known as Dindings Supreme Sdn Bhd, to Tyson International Holding Co.

The transaction was structured to be fully satisfied in cash and included call options for Tyson, which is the world’s second-largest processor and marketer of chicken, beef, and pork, with brands such as Tyson, Jimmy Dean, and Sara Lee.

Under the agreement, the consideration was to be paid in three main tranches, subject to Dindings Tyson meeting several earnings and cash position targets.