PETALING JAYA: Techna-X Bhd’s wholly owned subsidiary Linyi Yehua Coking Co Ltd will temporarily cease its metallurgical coke business operations by Dec 31, 2021 until the business improves and a clearer prospect forward can be established.
The group’s coke business which has been classified as “discontinuing operation”, remains in dire situation as it recorded a cumulative net loss of RM59.1 million for the six-months period ending June 30, 2021.
The group stated that the temporary cessation will immediately address the ongoing operational losses as well as to stem the continuous financial strain.
“The board’s decision to temporary cease this business is an attempt to safeguard our shareholders’ value and to preserve the financial position of the group from deterioration further pending the completion of the proposed disposal of the metallurgical coke business,” said Techna-X executive chairman Tunku Naquiyuddin Tuanku Ja’afar.
The group’s metallurgical coke business has been suffering significant losses over the past few years with losses of RMB308 million (RM198 billion) in FY2019, RMB265 million in FY2020 and had already clocked-up about RMB100 million for the first half of FY2021. Such trend is expected to continue for the remaining second half of the current year. The industrial coke division continues to have limited visibility of recovery as the coke industry (especially for independent coke producers) is expected to continue to face many challenges moving forward.
“The board believes that the group’s other business activities, namely that of the digital technology which have started to gain traction, will continue to be viable to sustain the group moving forward. As soon as the group is able to dispose of the continued loss-making coke business, more resources and efforts can be channelled towards building up the promising technology and digital transformation businesses for growth and value creation. Additionally, the impending disposal of the coke business, once completed, a significant ‘gain on disposal’ may be recognised by the group,” added Tunku Naquiyuddin.
The impending cessation, once materialised, is expected to improve the overall performance of Techna-X for the financial year ending Dec 31, 2022. However, at this juncture, it is unable to ascertain the extent of the impact.
The group’s board believes its other business, namely digital technology, has started to gain traction and will continue to be viable to sustain the group moving forward.