Shareholders set to approve Sunzen’s diversification plan

KUALA LUMPUR: Sunzen Biotech Bhd’s proposed ratification of its business diversification into the trading of crude palm oil (CPO) and derivative products will be approved by shareholders at an extraordinary general meeting.

Its management has decided to continue growth in the segment as it has been contributing significantly to the group.

Sunzen said the diversification was a coincidental strategy that began at the end of 2016 when it was seeking to secure a consistent supply of refined, bleached and deodorised (RBD) palm stearin — a CPO derivative — to manufacture powder fat for an animal feed product.

Sunzen had then started purchasing CPO from millers and sending it to refiners be to processed into RBD palm stearin.

However, this was unfavourable to the company as the fractionation also turned CPO into RBD palm olein, which the company had no market to sell.

“Therefore, the group decided to buy RBD palm stearin from refiners by selling CPO at a profit,” it said in a statement on Friday.

Sunzen then started receiving orders for CPO from refiners.

“Due to the increasing quantities of CPO or refined palm oil requested by the offtake customers, the contribution from trading in CPO and derivative products contributed significantly to the group’s net profit,” it Sunzen.

For the nine-month financial period ended September 30 last year, the trading of CPO and derivative products contributed 83.24 and 97.51 per cent to the company’s revenue and net profit, respectively.