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Jubilee set to up injection mould production capacity with S$3.5m acquisition of Honfoong Plastics Industries

CATALIST-LISTED precision manufacturer Jubilee Industries Holdings Ltd is set to expand its plastic injection mould business by acquiring Honfoong Plastics Industries Pte Ltd, the group has said.

Jubilee will fork out S$3.5 million under the terms of a sales and purchase agreement announced on the Singapore Exchange website on Tuesday (Dec 12).

This sum comprises S$1 million in cash, as well as S$2.5 million in almost 55.6 million new Jubilee shares at 4.5 Singapore cents apiece.

The Singapore-headquartered Jubilee will add to its mechanical business segment the 93 plastic injection moulding machines at Honfoong's main production plant in Batam, Indonesia.

Alongside the 32 new machines that Jubilee is buying for its Malaysian facilities in Johor Bahru, the deal is set to nearly quintuple Jubilee's plastic injection moulding machine count.

The group said that it plans to raise its production capacity from 26 units now to 150 machines in its 2018 financial year, which runs to March 31, 2018.

With about half of Honfoong's machines dedicated to producing medical parts in a clean room, Jubilee is also slated to net its first direct medical supplies customer, according to non-executive chairman Terence Tea.

Mr Tea - also the chief executive, managing director and executive chairman of Jubilee's parent company, Accrelist - said in a press release: "The acquisition of Honfoong is a strategic move as it significantly scales up our plastic injection moulding capacity and will enable us to take on more orders."

Noting that Jubilee's facilities "are running at full capacity" at present, Mr Tea added: "Besides the significant increase in production capacity, Honfoong will add sub-assembly and spray coating services to our existing suite of mechanical manufacturing services.

"With expanded capacity and wider scope of services, Jubilee will be ready to take on new customers beyond Malaysia and China, to the rest of Asia-Pacific."

Jubilee most recently reported a net profit of S$808,000 in the six months to Sept 30, 2017 - a turnaround from the losses of S$2.68 million in the same period the year before. This came on turnover that was 83.7 per cent higher, at S$87.5 million.

Mr Tea said that revenue from the mechanical segment amounted to S$4 million - higher by 11.1 per cent - and "the planned increase in production capacity will add significantly to our revenue".

Besides the mechanical segment, Jubilee's other main business segment is in electronics - more specifically, integrated electronic component distribution services and modular design fabrication.

Accrelist most recently agreed on Nov 28 to offset an outstanding loan of S$10.9 million, against the cost of Accrelist's entitlement and excess rights shares with warrants under Jubilee's proposed rights cum warrants issue.

Jubilee said at the time that the majority of the net proceeds would go towards merger and acquisition activities and machine capacity expansion.

The counter closed flat at 4.1 Singapore cents, on a volume of 1.42 million shares, before the announcement.