ETA trims stake in Indonesian canned food unit Rex Canning

ETA Group Bhd, previously known as Rex Industry Bhd, is selling its 38 percent stake in Indonesian canned food maker PT Rex Canning and its entire share in Rex Foods Sdn Bhd for RM22.73 million in cash. This share sale agreement was concluded with VIP Bonanza Sdn Bhd, with RM14.04 million corresponding to the 38 percent stake in Rex Canning and RM8.68 million for the 100 percent stake in Rex Foods.

Following the completion of the sale, ETA will maintain a 62 percent stake in Rex Canning, which will continue to be a subsidiary. ETA's strategic aim is to diminish its dependence on the food and beverage (F&B) sector and gradually shift its earnings mix towards property and construction. The board is cautiously optimistic about the financial benefits arising from the property and construction business, as it anticipates positive future performance, considering the new construction contracts and awards the group has secured.

The company intends to utilize RM22.63 million of the proceeds for general working capital, primarily for its property and construction operations, while RM100,000 will be allocated for estimated expenses related to the disposal. These funds are anticipated to assist in meeting the working capital requirements for several ongoing construction projects, including three contracts valued at RM66.69 million awarded by ETA Industries Sdn Bhd on September 22.

Rex Canning, a manufacturer and exporter of canned food, reported revenue of 317.51 billion rupiah, representing a 25.74 percent increase compared to the previous financial year. Its net profit surged by 368.5 percent from a loss in the financial year ending June 30, 2024. The company attributes Rex Canning's improved performance to a revival in overseas demand and higher margins due to increased canned food sales.

However, it highlights that Rex Canning remains primarily export-oriented, with customers mainly in the United States, Europe, and Asia, making the business vulnerable to fluctuations in international demand and macroeconomic conditions. The planned disposal follows ETA's shift in strategic direction following ETA Industries' acquisition of 55.04 percent of ETA's shares in June 2025.

Since then, ETA has divested its entire interests in Rex Canning Co Sdn Bhd and Rex Trading Sdn Bhd, identifying these as primary contributors to historical losses, and has ventured into property and construction since March 2026. The transaction is expected to yield a pro forma loss of RM100,000, pending audit review. The disposal is scheduled to be finalized in the fourth quarter of 2026, contingent upon the fulfillment or waiver of conditions precedent.