Hafary Holdings Makes Strategic Acquisition in Shanghai and Streamlines Subsidiary Portfolio: What Investors Need to Know

Key Points from Hafary Holdings’ Latest SGX Disclosure

• Acquisition of MML (Shanghai) Trading Co., Ltd. completed for RMB 15 million (~S\$2.8 million).
• Acquisition classified as an Interested Person Transaction due to links with controlling shareholder Hap Seng Consolidated Berhad (HSCB).
• Profitability and Asset Value: MML (Shanghai) delivered a profit after tax of RMB 4.38 million for FY2024 and held net assets of RMB 15.05 million at year-end.
• Streamlining: Marble Trends Pte. Ltd. subsidiary struck off, with no material financial impact expected.

Detailed Analysis: Strategic Acquisition Could Signal Growth for Hafary Holdings

Hafary Holdings Limited has announced the completion of its acquisition of 100% of MML (Shanghai) Trading Co., Ltd. from Malaysian Mosaics Sdn. Bhd. (MMSB), a wholly-owned subsidiary of its controlling shareholder Hap Seng Consolidated Berhad (HSCB). The deal, executed through Hafary’s wholly-owned subsidiary Hafary Shanghai Pte Ltd, was finalized on 3 January 2025 for a cash consideration of RMB 15 million (approximately S\$2.8 million).

The acquisition price reflects 2.37% of Hafary’s latest audited net tangible assets, suggesting a relatively modest impact on the group’s balance sheet. Importantly for shareholders, the acquisition was based on the actual performance and asset value of MML (Shanghai): the company generated a profit after tax of RMB 4.38 million in FY2024 and had audited net assets of RMB 15.05 million as at 31 December 2024.

Why is this significant? MML (Shanghai) is now a wholly-owned subsidiary, which could signal Hafary’s intention to strengthen its presence in the Chinese market. Investors should note that the transaction was deemed an interested person transaction under SGX regulations, due to HSCB’s involvement. However, since the deal size was below 3% of Hafary’s net tangible assets, no immediate announcement was required under Chapter 9 of the SGX Listing Manual. The acquisition also did not trigger disclosure requirements under Chapter 10, as none of the relative figures exceeded 5%.

Directors linked to HSCB, including Datuk Edward Lee Ming Foo JP and Ms Cheah Yee Leng, recused themselves from deliberating and voting on the deal, in line with Singapore’s Code of Corporate Governance. For transparency, Hafary confirmed that no directors or controlling shareholders (other than via their indirect interests as shareholders or directors) have any direct interest in the acquisition.

Subsidiary Struck Off: No Material Financial Impact

In a separate move, Hafary announced the striking off of Marble Trends Pte. Ltd., a subsidiary. The company clarified that this action is not expected to materially affect Hafary’s earnings per share or net tangible assets per share for the year ending 31 December 2025. Again, no directors or controlling shareholders (except through their shareholdings or directorships) have any direct interest in this transaction.

What Should Shareholders Watch?

• Strategic Expansion: The acquisition could enhance Hafary’s footprint in China, potentially leading to new growth opportunities and revenue streams.
• Governance Transparency: Hafary’s handling of the interested person transaction, including director recusals, demonstrates adherence to good governance practices.
• No Immediate Financial Impact: Both the acquisition and the subsidiary strike-off are unlikely to cause significant changes in Hafary’s short-term financial metrics, but the Shanghai business could offer future upside.
• Potential Price Sensitivity: Investors may react positively to Hafary’s expansion strategy and prudent governance, though the modest size of the transaction means any share price movement may be muted unless further developments emerge.

Conclusion

While the announced transactions are not immediately material to Hafary’s financials, the successful completion of the MML (Shanghai) acquisition underscores a strategic commitment to growth in China. Investors should monitor future updates for signs of financial contribution from the new subsidiary and any further expansion moves.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making any investment decisions.

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