Oriental Food Industries Holdings Berhad: Key Shareholder Resolutions for 2026 AGM

Major Proposals Could Impact Share Value: Recurrent Related Party Transactions and Share Buy-Back Authority

Oriental Food Industries Holdings Berhad (OFIH) has released a comprehensive circular to shareholders ahead of its Thirtieth Annual General Meeting (AGM), scheduled for 26 August 2026. The company seeks approval for two significant proposals:

• Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPT) of a revenue or trading nature
• Renewal of Share Buy-Back Authority, allowing the company to purchase up to 10% of its issued shares

1. Proposed Renewal of Shareholders’ Mandate for RRPT

Key Highlights

• The RRPT mandate allows OFIH and its subsidiaries to continue entering into recurrent transactions with related parties, notably with Syarikat Perniagaan Chong Mah Sdn Bhd (Chong Mah), a major shareholder holding 14.30% of OFIH.
• Chong Mah is a primary distributor for OFIH’s snack food and confectionery products. For the financial year ended 31 March 2026, OFIH reported that about 40% of its sales were domestic, with 60% derived from international markets.
• The estimated value of transactions with Chong Mah for the next mandate period is up to RM7.5 million, based on historical transactions and market demand.
• All RRPTs are required to be conducted at arm’s length and on commercial terms not more favourable to the related party than those available to the public, to prevent detriment to minority shareholders.
• The RRPT mandate, if not renewed, will lapse at the conclusion of the AGM.

Important Shareholder Considerations

• Price Sensitivity: Approval for continued RRPTs with a major shareholder/distributor could impact the company’s sales channels and earnings stability. Any perceived conflict of interest or changes in the structure of these transactions may influence investor sentiment and share price.
• Interested parties, including Lim Keat Sear (Director and major shareholder), Chong Mah, Thung Shung (another major shareholder), and Summer Legend, will abstain from voting on the RRPT resolution to mitigate conflict of interest.
• The Risk Management and Audit Committee has reviewed and endorsed the procedures for RRPTs, asserting that these are sufficient to protect minority interests and ensure transparency.
• Shareholders are advised that failure to renew the mandate could disrupt the group’s distribution arrangements and potentially impact sales, which may affect the share price.

2. Proposed Renewal of Share Buy-Back Authority

Key Highlights

• The proposal authorises OFIH to buy back up to 10% of its issued shares (maximum 24,000,000 shares) using retained profits and/or bank borrowings. As at 31 March 2026, retained profits stood at RM5.1 million.
• Purchased shares may be cancelled or held as treasury shares, giving the board flexibility to distribute them as share dividends, resell them for capital gains, or use them for other purposes as allowed by law.
• OFIH’s public shareholding spread is currently 34.14%. If the buy-back is fully executed and all shares are cancelled, the spread will reduce to 26.82%, still above the 25% regulatory minimum.
• No share buy-back activities occurred in the past 12 months, indicating a potential change in capital management strategy if this mandate is exercised.
• Directors and substantial shareholders will see a proportional increase in their percentage holdings if the buy-back is carried out, but are not permitted to benefit from the buy-back directly.
• Importantly, the board will ensure that any share buy-back does not trigger a mandatory general offer under the Malaysian Code on Take-Overs and Mergers, which could have significant implications for control of the company.

Potential Impacts and Price-Sensitive Issues

• Share Price Support: A share buy-back can stabilise or support the share price by reducing market supply, signalling management’s confidence in the company’s value, and potentially enhancing earnings per share (EPS) and net asset (NA) per share.
• Dividend Policy: If buy-back shares are held as treasury shares, dividend payments may be higher for remaining shareholders since treasury shares are not entitled to dividends.
• Capital Utilisation: The move enables OFIH to deploy surplus cash in a manner that could enhance shareholder returns, though it reduces cash available for other investments or dividends.
• If funded by borrowings, higher interest costs could impact net profit and cash flow, and thus, shareholder value.
• Significant share price movements may occur if the market perceives the buy-back activity as a sign of undervaluation or impending positive developments in the company.

3. Governance, Transparency, and Voting Process

• All resolutions will be voted by poll at the AGM to ensure fairness and transparency.
• Shareholders are encouraged to attend the AGM or vote by proxy. The “Form of Proxy” must be submitted at least 24 hours before the AGM.
• The company affirms that all related party transactions and share buy-back activities will be disclosed in the annual report for transparency.
• Directors have collectively confirmed the accuracy of all information in the circular and accepted responsibility for any omissions.

4. Risk Factors and Disclosures

• OFIH is not involved in any material litigation or arbitration, and there are no material contracts outside the ordinary course of business.
• No service or management agreements exist with related parties, maintaining an arm’s length relationship in all transactions.
• All relevant documents are available for inspection at the registered office up to the date of the AGM.

Conclusion and Recommendation

The board, except for interested parties, unanimously recommends that shareholders vote in favour of both the RRPT and Share Buy-Back resolutions, citing transparency, effective governance, and potential upside for shareholder value. These resolutions, if approved, could have significant implications for OFIH’s capital management and distribution strategy, possibly impacting the company’s share price and investor returns.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Shareholders are advised to consult professional advisors before making investment decisions. The company and its directors do not accept responsibility for actions taken based on this summary.

Versi Bahasa Malaysia

Oriental Food Industries Holdings Berhad: Resolusi Penting untuk Mesyuarat Agung Tahunan 2026

Cadangan Utama Boleh Beri Kesan Kepada Harga Saham: Mandat Transaksi Pihak Berkaitan dan Pembaharuan Kuasa Pembelian Balik Saham

Oriental Food Industries Holdings Berhad (OFIH) telah mengedarkan surat pekeliling penting kepada para pemegang saham menjelang Mesyuarat Agung Tahunan (AGM) ke-30 yang akan diadakan pada 26 Ogos 2026. Syarikat memohon kelulusan untuk dua cadangan utama:

• Pembaharuan Mandat Pemegang Saham untuk Transaksi Pihak Berkaitan Berulang (RRPT)
• Pembaharuan Kuasa Pembelian Balik Saham sehingga 10% daripada jumlah saham diterbitkan syarikat

1. Pembaharuan Mandat RRPT

Poin Penting

• Mandat ini membolehkan kumpulan OFIH meneruskan transaksi berulang dengan pihak berkaitan, khususnya dengan Syarikat Perniagaan Chong Mah Sdn Bhd (Chong Mah), pemegang saham utama dengan 14.30% pegangan dalam OFIH.
• Chong Mah ialah pengedar utama produk makanan ringan dan konfeksi OFIH. Untuk tahun kewangan berakhir 31 Mac 2026, 40% jualan adalah domestik dan 60% eksport.
• Nilai anggaran transaksi dengan Chong Mah untuk tempoh mandat akan datang ialah sehingga RM7.5 juta.
• Semua transaksi RRPT mesti dilakukan pada terma komersial biasa dan tidak lebih menguntungkan pihak berkaitan berbanding pihak luar.
• Jika mandat tidak diperbaharui, ianya akan luput selepas AGM.

Pertimbangan Penting untuk Pemegang Saham

• Kepekaan Harga: Kelulusan untuk meneruskan RRPT dengan pengedar utama boleh menjejaskan kestabilan pendapatan dan struktur jualan syarikat, sekali gus berpotensi mempengaruhi harga saham.
• Pihak berkepentingan seperti Lim Keat Sear, Chong Mah, Thung Shung dan Summer Legend akan berkecuali daripada mengundi untuk mengelakkan konflik kepentingan.
• Jawatankuasa Audit dan Pengurusan Risiko telah mengesahkan ketelusan dan kecukupan prosedur sedia ada.

2. Pembaharuan Kuasa Pembelian Balik Saham

Poin Penting

• OFIH memohon kebenaran membeli semula sehingga 10% saham diterbitkan (maksimum 24,000,000 saham) menggunakan keuntungan terkumpul dan/atau pinjaman bank. Keuntungan terkumpul setakat 31 Mac 2026 ialah RM5.1 juta.
• Saham dibeli boleh dibatalkan atau disimpan sebagai saham perbendaharaan untuk agihan dividen, dijual semula, atau tujuan lain yang dibenarkan.
• Penyebaran pegangan awam kini 34.14%. Jika pembelian balik maksimum dan semua saham dibatalkan, penyebaran akan menjadi 26.82%, masih di atas minimum 25% yang dikehendaki oleh undang-undang.
• Tiada aktiviti pembelian balik berlaku dalam 12 bulan lepas.
• Pembelian balik boleh menstabilkan harga saham, meningkatkan EPS dan NA per saham, serta memberi isyarat keyakinan pengurusan terhadap nilai syarikat.

Kesan Potensi dan Isu Kepekaan Harga

• Sokongan Harga Saham: Pembelian balik boleh menyokong harga saham dengan mengurangkan penawaran di pasaran.
• Dasar Dividen: Jika saham dibeli disimpan sebagai saham perbendaharaan, pembayaran dividen kepada pemegang saham lain mungkin meningkat.
• Penggunaan Modal: Syarikat boleh menggunakan lebihan tunai untuk meningkatkan pulangan pemegang saham, tetapi mengurangkan dana untuk pelaburan lain atau pembayaran dividen.
• Jika dibiayai dengan pinjaman, kos faedah yang lebih tinggi boleh menjejaskan keuntungan bersih dan aliran tunai.

3. Tadbir Urus, Ketelusan dan Proses Pengundian

• Semua resolusi akan diundi secara undian sulit (poll) untuk memastikan ketelusan.
• Pemegang saham digalakkan hadir atau mengundi melalui proksi yang perlu dikemukakan sekurang-kurangnya 24 jam sebelum AGM.
• Semua transaksi RRPT dan aktiviti pembelian balik akan didedahkan dalam laporan tahunan.
• Lembaga Pengarah bertanggungjawab penuh atas ketepatan maklumat dalam surat pekeliling ini.

4. Risiko dan Pendedahan

• OFIH tidak terlibat dalam sebarang litigasi atau kontrak material di luar operasi biasa syarikat.
• Tiada perjanjian perkhidmatan atau pengurusan dengan pihak berkaitan.
• Dokumen berkaitan sedia untuk pemeriksaan di pejabat berdaftar sehingga tarikh AGM.

Kesimpulan dan Cadangan

Lembaga Pengarah (kecuali pihak berkepentingan) mengesyorkan agar pemegang saham mengundi menyokong kedua-dua resolusi RRPT dan Pembelian Balik Saham kerana ia dijalankan secara telus dan berpotensi memberi nilai tambah kepada pemegang saham serta kestabilan harga saham syarikat.

Penafian: Artikel ini untuk makluman sahaja dan bukan nasihat pelaburan. Pemegang saham dinasihatkan mendapatkan nasihat profesional sebelum membuat sebarang keputusan pelaburan. Syarikat dan pengarah tidak bertanggungjawab atas tindakan berdasarkan ringkasan ini.

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