Kim Teck Cheong plans RM30m Gardenia bakery plant in Sarawak expansion

PETALING JAYA (July 14): Kim Teck Cheong Consolidated Bhd has entered into a memorandum of understanding (MOU) with Sanjung Etika Sdn Bhd, a wholly-owned subsidiary of Yayasan Sarawak, to establish a joint venture (JV) company that will build and operate a bakery manufacturing facility in Kuching for the production, packaging and distribution of Gardenia bakery products in Sarawak, according to a Bursa Malaysia filing yesterday

In earlier disclosures, KTC said it plans to invest RM30 million in the bakery manufacturing plant on a 7.56-acre site in Kota Samarahan Industrial Park, for which it has obtained in-principle approval from the Sarawak government for land allocation. However, neither Monday's Bursa filing nor the earlier disclosure specifies the land consideration, premium, tenure or whether any incentives are attached to the allocation. 

Kota Samarahan Industrial Park is a state-backed industrial zone heavily favored by food manufacturing and logistics firms because of its ready-built infrastructure. While final land premium and tenure terms remain undisclosed, state-allocated industrial plots in Sarawak typically feature leasehold tenures of up to 60 years. The strategic location provides direct connectivity to Kuching's major distribution corridors, lowering logistics costs for regional market expansion.

The proposed JV will be 80%-owned by KTC and 20% by Sanjung Etika. The parties intend to negotiate and execute a definitive JV agreement incorporating the detailed commercial terms governing the proposed collaboration.

The proposed venture will establish a bakery manufacturing factory in Kuching to produce, package and distribute Gardenia bakery products for consumers in Sarawak. Under the proposed structure, KTC will be responsible for the JV's day-to-day operations, while its board of directors will oversee the company's overall management and supervision.

The JV's initial working capital contribution is expected to be up to RM6 million, to be funded by KTC and Sanjung Etika in proportion to their respective equity interests.

KTC said the proposed collaboration would expand its manufacturing footprint into Sarawak through the establishment of a bakery manufacturing facility. It expects the venture to enhance operational efficiencies, improve product availability and distribution within the state, strengthen its presence in East Malaysia, and support future business growth.

The MOU will remain in force for 24 months from the date of execution unless terminated earlier in accordance with its terms. Except for provisions relating to confidentiality and certain ancillary matters, the MOU is not intended to create legally binding obligations between the parties.

The proposed collaboration remains subject to, among others, the successful negotiation and execution of the definitive joint venture agreement, approvals from the boards of directors of KTC and Sanjung Etika, the necessary regulatory, statutory and third-party approvals, and the successful implementation of the proposed bakery manufacturing project.

KTC said the MOU is not expected to have any immediate effect on its earnings per share, net assets per share, share capital or substantial shareholders' shareholdings for the financial year ending June 30, 2027. Any financial impact arising from the proposed joint venture will depend on the final terms of the definitive agreements.

The company added that none of its directors, major shareholders or persons connected with them has any direct or indirect interest in the MOU.

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