Heatec Jietong Sells Setya Energy for S\$1: A Strategic Move to Strengthen Financial Position

Key Highlights of the Disposal Announcement

• Heatec Jietong Holdings Ltd. agrees to sell 60% stake in Setya Energy Pte. Ltd. for S\$1.
• Buyer is an internal sales manager, with no family or substantial shareholder ties to the board.
• Setya Energy has been loss-making and in a net liability position for the past two years.
• Transaction includes repayment of S\$165,000 in outstanding payables and a waiver of S\$43,158 in intercompany debts.
• Group will record a modest gain of S\$7,673 from the transaction.
• Disposal classified as a “disclosable transaction” under SGX Catalist Rules—immediate announcement required.
• Financial impact: Slight improvement in NTA per share and loss per share post-disposal.

Detailed Analysis: What Investors Need to Know

1. Transaction Structure and Rationale

Heatec Jietong Holdings Limited (“Heatec Jietong”) has entered into a sale and purchase agreement to divest 60% of its stake (300,000 shares) in Setya Energy Pte. Ltd. (“Setya Energy”) to Mr. Lim Kay Cheong, a sales manager at its wholly owned subsidiary, Heatec Jietong Pte. Ltd.
The sale price is a token S\$1, reflecting the net tangible liabilities and persistent losses at Setya Energy. The company will cease to have any interest in Setya Energy post-transaction, and Setya Energy will no longer be part of the group.

2. Financial Health of Setya Energy

Setya Energy, incorporated in 2017, specializes in the supply and trading of petroleum products, bunkers, lubricants, chemicals, equipment, and tools. The subsidiary has struggled for several years, reporting net tangible liabilities of S\$84,717 as of end-2024, and S\$94,008 at mid-2025. Its losses continue to mount, with a net loss before tax of S\$154,518 for the first half of 2025, S\$92,711 of which relates to the shares being disposed. The company has faced customer attrition in its bunkering oil business due to macroeconomic challenges and intense competition.

3. Terms of the Disposal

• Setya Energy will use its cash reserves (~S\$88,080) to repay intercompany balances to Heatec Jietong or its group members prior to completion.
• The remaining S\$165,000 owed to the group will be repaid in monthly instalments over 24 months.
• Heatec Jietong will waive S\$43,158 of intercompany balances and claims owed by Setya Energy.
• No open market value or independent valuation was conducted; the book value of the shares is nil, making the nominal sale price and terms reflective of the asset’s condition.

4. Buyer’s Profile and Conflict Mitigation

Mr. Lim Kay Cheong is not related to any director or controlling shareholder. He has declared that post-disposal, he will not be involved in Setya Energy’s daily operations or compete with Heatec Jietong’s core heat exchanger and piping business, ensuring no conflict of interest. Future dealings between the group and Setya Energy will be on an arm’s length and non-exclusive basis.

5. Strategic Rationale and Implications for Shareholders

The disposal allows Heatec Jietong to exit an underperforming subsidiary and avoid future losses. This move is expected to improve the group’s liquidity and working capital. The disposal will result in an accounting gain of S\$7,673, which, although modest, signals management’s commitment to strengthening the balance sheet and focusing on profitable core operations.

6. Price Sensitive Disclosures and Shareholder Impact

• The transaction is immediately disclosable under SGX Catalist Rules due to its nature (negative net asset value and loss-making asset).
• After the disposal, the group’s NTA per share increases slightly from 5.28 to 5.29 cents, and loss per share improves from 0.46 to 0.45 cents.
• No new directors or service contracts are proposed in connection with the disposal.

7. Potential Share Price Impact

The announcement could be price sensitive given the removal of a persistent loss-making subsidiary, a slight improvement in key financial ratios, and a clear strategic shift towards core business focus. Investors may view this as positive for future profitability and risk management, although the immediate monetary gain is minimal.

Conclusion

The disposal of Setya Energy Pte. Ltd. marks a strategic turning point for Heatec Jietong Holdings Ltd. Investors should monitor the company’s next steps, especially how management deploys reclaimed resources and focuses on its core, potentially more profitable sectors.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice or a recommendation to buy or sell securities. Investors are urged to consult their own professional advisors and review official company filings before making investment decisions.

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