KUALA LUMPUR (Dec 28): Equipment and engineering parts provider UMS Holdings Bhd has disposed of its entire 45.13% stake in oil and gas equipment supplier MKS Sdn Bhd to its major shareholder NGT Holdings Sdn Bhd for RM6.11 million in a related party transaction.

The disposal, by UMS’ wholly-owned unit Aqua Terra Union Oilfield Supply Sdn Bhd (ATU), sees the group booking expected gains of RM5.4 million, as its cost of investment in MKS totalled RM714,802.

“The rationale for this disposal is to take advantage of the expected gain arising from this disposal,” it said, citing the capital gain tax on disposal of unlisted shares which will take effect from Jan 1, 2024. UMS expects the disposal to be completed before end-2023.

“As ATU is an investment holding company, the proceeds/gains from the disposal are mainly for dividend payments,” it added.

UMS is a consistent dividend payer, with dividends paid at 10 sen per share annually from FY2014 to FY2019 before the pandemic resulted in lower dividends of six sen per share in FY2020 and FY2021.

It paid eight sen per share in dividends in FY2022. The company has not announced any dividends for FY2023. Since 2018, it has been making dividend announcements in late or end January.

Back of the calculations show that the RM6.11 million disposal amounted to 13.26 sen per share for the company.

The group booked a net profit of RM4.12 million or 10.14 sen per share in the full-year ended Sept 30, 2023 (FY2023).

The full FY2023 net profit of RM4.12 million was 6.5% higher than the RM3.87 million or 9.52 sen per share in FY2022, even as revenue fell 4.32% to RM70.85 million from RM74.05 million, on the back of lower cost of sales and tax expense in the year under review.

For UMS’ 15.9% direct shareholder NGT Holdings, the acquisition of the stake will raise its shareholding in MKS to 67.12% from 21.99%, according to SSM data.

In FY2022, MKS net profit rose 60.57% y-o-y to RM240,199 from RM149,589, as revenue rose 21.97% to RM551,496, from RM452,171 in FY2021, the data showed.

The Ng family, led by UMS managing director Ng Seng Kong, collectively holds over 22% in UMS.

UMS also has non-executive director Teo Yin Zhi as a substantial shareholder with 1.02% direct and 25.09% deemed interest in the listed entity.

Shares of UMS closed four sen or 2.02% higher at RM2.02, giving the group a market capitalisation of RM82.19 million.