KLK announced that its wholly-owned subsidiary, KLK Emmerich GmbH had on 26 May 2015 entered into a conditional Asset Purchase Agreement to acquire the oleochemical assets and business of Emery Olechemicals GmbH (Emery) in Holthausen, Germany for €40.5m or RM162m subject to adjustments. Emery is held in equal shares by Sime Darby Plantation and PTT Chemical International. (Source: Bursa Malaysia)
Comments: The proposed acquisition is not expected to have a significant impact on our FY15E-17E core net profit forecasts for KLK. It would however complement KLK’s existing fatty acids and glycerine business in Europe. The KLK Group currently has thirteen resource-based manufacturing plants located in Malaysia, China and Europe with a total capacity of 2.0m MT p.a., to be further expanded to 2.2m MT in FY15 and 2.4m MT in FY16. The proposed acquisition is expected to be completed in 3Q15.
KLK is currently rated at HOLD with a TP of RM22.79 but the share price is declining towards the BUY level.
Source: Affin Hwang Capital Research - 9 Jun 2015
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