Grand-Flo to go into construction

KUALA LUMPUR (April 11): Home-grown tracking solutions provider Grand-Flo Bhd is buying the remaining 49.99% stake in property development firm Innoceria Sdn Bhd (ISB) for RM21.9 million in cash, from its executive director Chuah Chew Hai, after which it will venture into construction.

Grand-Flo currently owns a 50% equity interest in ISB, which was acquired in August 2014 for RM15 million, marking the group’s first foray into property development, according to the group’s Bursa Malaysia filing yesterday.

Since then, property development has become the major contributor to the group’s financial performance. In the financial year ended Dec 31, 2017 (FY17), Grand-Flo’s net profit was RM3.34 million, of which the property development segment contributed about RM2.77 million or 82.9%.

Grand-Flo inked a conditional share sale agreement with Chuah yesterday for the stake buy, which it will finance using internal funds. On completion of the buy, ISB will become its wholly-owned subsidiary.

Grand-Flo also said ISB is currently involved in a mixed development — the Vortex Business Park project in Penang, in which it owns the development rights and interests. The project is currently in phase two of development. Phase one was completed in July 2017, and has a take-up rate of about 84%, it added.

Phase two entails developing semi-detached shop-offices and light industrial factories with an estimated gross development value of about RM88.17 million, and a gross development profit of RM13.67 million to be realised over a development period of 2½ years.

As for the diversification, Grand-Flo said it will expand its earnings base and complement the group’s property development business. Grand-Flo expects the proposals to be completed by the second half of this year.

This article first appeared in The Edge Financial Daily, on April 11, 2018.

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