Ho Wah Genting ventures into auto industry

by **Cals** Wed 02 Oct 2013, 20:01

Business & Markets 2013

Written by Cynthia Blemin of theedgemalaysia.com

Wednesday, 02 October 2013 19:17

KUALA LUMPUR (Oct 2): HO WAH GENTING BHD [] [] (HWGB) has proposed to acquire the entire issued and paid-up share capital of Rex Oriental Sdn Bhd (ROSB) for RM3 million to venture into the auto sector.

In an announcement on Bursa today, HWGB said it has entered into a share sale and purchase agreement with vendors, Quek Wang and Liew Jenn Lim, to acquire 400,000 ordinary shares of ROSB of RM1 each.

The principal activity of ROSB is investment holding and it’s 70% owned subsidiary, Orient Sun Motors Sdn Bhd (OSM) is involved in trading in motor vehicles.

The deal will be satisfied via internally generated funds and borrowings, said the company which also manufactures and trades wires and cables.

“The rationale for the proposed acquisition is to provide the company an opportunity to venture into the auto industry in Malaysia via OSM’s existing platform which could be immediately leveraged upon to gain traction in rolling out models from its Chinese automakers to generate revenue,” it said.

It noted that it is well accepted in the motor industry that the next wave will come from China.

With OSM, the company has secured the distributorships of China automakers with the relevant Malaysian authorities’ approvals, thus a foothold to participate in the local auto industry with Chinese made vehicles, it opined.

It opined the proposed acquisition will enable the company to diversify its earnings stream at a low entry price.

The proposed acquisition is also expected to provide the company an instant avenue to foster greater working relationships with the Chinese automakers, not only in terms of establishing a firm footing in Malaysia, but with the potential of penetrating neighbouring ASEAN countries via Malaysia under the ASEAN treaties viz AFTA, it added.

OSM also holds a franchise distributorship from Hebei Zhongxing Automobile Co Ltd, China (ZX Auto) allowing OSM to distribute in Malaysia all motor vehicle models manufactured by ZX Auto.