Chin Hin Group continues M&A spree

Company looking for synergies with latest acquisitions

CHIN Hin Group Bhd is again making waves for its acquisitive drive.

Chin Hin is a 31.2% stake owner in Signature International Bhd after purchasing a stake in March 2021.

Earlier in the week, Signature had announced its intention to acquire a 23.67% stake in Main Market-listed Fiamma Holdings Bhd for Rm180mil cash or RM1.50 per share.

Fiamma mainly distributes and services home and kitchen electrical appliances and it also makes built-in kitchen and wardrobes.

In December 2020, Chin Hin had parked Chin Hin Group Property Bhd (CHGP) under its stable after it acquired a 51.5% equity stake in a related party transaction (RPT) from the latter’s major shareholders.

According to its 2021 annual report, Chin Hin now has an effective 59.3% stake in CHGP.

There have been more acquisitions. Chin Hin is now a 65%-owner of construction firm Kayangan Kemas Sdn Bhd and the company is the single largest 24.68% shareholder in construction and property group Ajiya Bhd.

Chin Hin had late last year also bought a 60% equity stake in infrastructure construction company Makna Setia Sdn Bhd through Kayangan Kemas.

Can Chin Hin digest all this?

“We are looking for synergies with these acquisitions. These acquisitions took a lot of background time and work, with up to six months of due diligence. When it was ready, it was all executed and announced over a short period of time,” the company’s group managing director Chiau Haw Choon tells Starbizweek.

“We are not actively planning for more acquisitions by Chin Hin or at the Signature International level. We are committed to growing these businesses,” Chiau says.

The Chin Hin group will be able to digest all these acquisitions, he adds.

“These acquisitions mean we are now a formidable player and are present across the whole value chain for the property and construction businesses. We are working hard to integrate these businesses and create the synergies,” Chiau says.

Commenting on the recent Fiamma acquisition, Chiau says Fiamma is expected to add around Rm7mil to Signature International’s net profit.

“Fiamma is in the affordable housing segment space while Signature is in the premium segment and they are complementary. They can fully integrate,” he says.

“We would like to offer total interior design solutions to a home buyer instead of people buying furnishing separately in stores as it might not match with the design of the house,” Chiau adds.

He also says another reason they decided to buy into Fiamma is because of the prime landbank.

“They have two pieces of prime land, in KLCC and in Sungai Besi. With our expertise in property development, we can generate more than Rm1bil in gross development value (GDV) from these lands.

“Under CHGP, we have about Rm2.5bil in GDV. We will launch four projects this year for CHGP,” Chiau says.

He says the KLCC and Sungai Besi land were bought five to ten years ago and carry a low book value.

“One piece of land is walking distance to KLCC while the Sungai Besi land is along the Sungai Besi Highway,” Chiau says, noting that they would be able to recoup the acquisition costs when these planned developments are executed.

Meanwhile, for Ajiya, he says its glass business is synergistic with the group’s aluminium business.

Earlier in the week also saw Chin Hin selling off its 19.34% stake in Solarvest Holdings Bhd to Divine Interventions Sdn Bhd in another RPT.

Chiau says this sale was done because it only had a minority stake in Solarvest and wanted to park this stake under a private vehicle.

This would then see Chin Hin’s gearing being lowered to about 1.05 times and raise Rm103.3mil.

“We want to maintain a gearing level of less than one time under the Chin Hin group of companies.

“For Chin Hin, this marks a divestment of non-core assets. After the acquisition of Fiamma, Signature’s gearing ratio is at about 0.7 times,” he says.

Chiau also says there are plans to conduct private placements at the CHGP company level. There is also a plan to list three of CHGP’S construction businesses.

“We target to submit for listing approval in the year 2024 and it will involve Kayangan Kemas, Makna Setia and Asia Baru Construction Sdn Bhd. This will happen once we have successfully completed their stake acquisitions, as some of that still requires certain condition precedents to be met,” Chiau says.

“These acquisitions mean we are now a formidable player and are present across the whole value chain for the property and construction businesses. We are working hard to integrate these businesses and create the synergies.” Chiau Haw Choon