Sino Hua-an International Bhd's plant in China.
KUALA LUMPUR: Sino Hua-An International Bhd, the first China-based company to list on Bursa Malaysia, is facing a possible trading suspension or delisting for triggering a listing requirement on maintaining adequate level of operations.
The metallurgical coke producer told Bursa Malaysia that an agreement signed by its unit Linyl Yehua Coking Co Ltd (Yehua) in January to lease some of its coking ovens and ancillary facilities had set off the criteria whereby Hua-An was purportedly deemed to have temporary suspended its business or its major operations.
A listed issuer is required to maintain an adequate level of operations to warrant continued trading or listing on Bursa Malaysia. It may not meet that level if it has ceased or suspended its major business (that which contributed or generated 70% or more of its revenue on a consolidated basis based on its latest annual audited or unaudited financial statements).
Sino Hua-An said it would submit an application to Bursa Securities to seek a waiver from complying with Paragraph 8.03A (2) and (3) of the Main Market listing requirements.
To recap, its wholly-owned subsidiary Yehua had entered into an agreement on Jan 29 to lease ovens no 1, 2 and 3 and its ancillary facilities to Linyi Xin Jiang Quan Metal Material Technology Co Ltd for 20 million yuan (RM12.6mil).
The lease is for a period of one year starting Feb 1, 2016, with an option to renew subject to mutual agreement between both parties.
The group still has ovens no 4 and 5 with total production capacity of 900,000 tonnes which it has deliberately delayed the “firing-up” given the prevailing unfavourable market condition (oversupply situation for steel and coke that depresses their prices).
Sino Hua-An said the lease agreement would give the group a fixed stream of income, relieve it off the burden of incurring all costs and expenses directly attributed to the production operations and, more importantly, did not require any huge capital expenditure outlays.
Sino Hua-An recently reported an unaudited net loss of RM279.25mil for the financial year ended Dec 31, 2015, compared with a net profit of RM2.0mil in the preceding year.
Sino Hua-An shares shed half a sen to close at 4.5 sen on Friday, with 49,800 shares being traded.
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