KUALA LUMPUR: Techfast Holdings Bhd is exploring opportunities in the local bunkering sector and petroleum trading to boost its income and has set up Fast Energy Sdn Bhd to source for businesses in the segment.
Techfast executive director Vincent Tan said Fast Energy was in talks with a major local bunker supply firm operating at Port Klang, Selangor to explore collaboration opportunities.
"Although we are in the midst of a pandemic, marine traffic remains high at Port Klang. Fast Energy will be positioned to capture a sizeable market share upon signing a collaboration agreement with the bunker supplier," Tan told the New Straits Times.
Techfast's foray into the bunkering sector would be boosted by CCK Petroleum Sdn Bhd, in which it is proposing to acquire a 35 per cent stake for RM26.25 million, he said.
The proposed acquisition of CCK, a company that supplies marine fuels, is pending shareholders' approval.
Tan said the acquisition and venture into the local bunkering and petroleum trading business could accelerate Techfast's earnings potential and reduce its exposure in manufacturing.
Techfast manufactures self-clinching fasteners, mould e-learning rubber sheets and LED epoxy encapsulate materials.
He said the petroleum trading business and bunkering business was expected to contribute more than 25 per cent to Techfast's annual net profits.
Tan is bullish that CCK could potentially elevate Techfast's aim to be a prominent bunker supplier in Malaysia with its trading network and experience.
CCK, which posted a pre-tax profit of RM969,282 last year, has been in the bunker industry for the past 10 years.
The company has access to 13 major ports here.
According to Tan, CCK aims to expand its existing trading network to include international ports after the proposed acquisition had been finalised.
He further said that CCK, which traditionally charters bunkering vessels for its marine refuelling operations, could for the first time become a shipowner of bunker tankers.
Tan said the squeeze in the supply of bunkers at Malaysian ports due to the implementation of new bunker-tanker requirements for double hull, double bottom, opens up new opportunities for CCK.
Existing bunker suppliers and bunker tanker operators would have to invest in new vessels in order to meet the requirement to legitimately perform marine refuelling operations within Malaysian waters, he added.
"For Techfast, we are happy to be in a position where investments into new bunker tankers to capture market share is a strong possibility. The shipping industry is experiencing exciting times where it is entering an energy transition from traditional oil-based fuels to cleaner alternative energy sources due to the upcoming International Maritime Organisation's (IMO) 2030/2050 regulation.
"Newbuilds, especially the larger vessels, are now opting for dual fuelled engines which can be powered by liquefied natural gas. This once in a lifetime change also provides an opportunity for Techfast to consider the possibility of venturing into the LNG bunkering sphere, after first establishing the bunkering business for traditional oil-based fuels," he said.