SKH Consortium seeks to diversify into property development, investment

KUALA LUMPUR (Aug 7): SKH Consortium Bhd has proposed to diversify its business to include property development and property investment, as part of the group’s business plan to improve its financial performance as well as its shareholders’ value.

SKH said the proposed diversification will allow the group to reduce reliance on its existing business in the information technology and information and communications technology (ICT) industries, as well as its construction activities.

“Considering the increasingly competitive market in the ICT industry in which the group operates, the group is constantly looking for business opportunities to have additional income streams and diversify to prevent over-reliance on one single industry,” SKH said in a filing with Bursa Malaysia yesterday.

As part of its diversification plan into property development, SKH is proposing to acquire an 80% stake in Kepayang Heights Sdn Bhd for RM13.6 million, which will own a 19.5-acre (7.89ha) piece of land in Bentong, Pahang. The land has a market value of RM15.5 million.

“The group has commenced a feasibility study on the proposed development of the land into a mix residential project. The proposed acquisition of Kepayang Heights is expected to be completed by mid- August upon payment of the balance purchase price and the registration of transfer of shares to SKH,” said SKH.

SKH is also looking to acquire a 70% stake in Rimbun Gabungan Sdn Bhd for RM12 million, which will be granted with an irrevocable, unconditional and full power of attorney from Rimbun Purnama Sdn Bhd (RPSB) to undertake an affordable housing development project with a gross development value of RM252 million on a piece of government land in Setapak owned by RPSB.

Meanwhile, for property investment, SKH said, in addition to the four-storey shop office located in Masai, Johor, which was acquired in 2014, the group has acquired eight additional properties during and after the financial year ended March 31, 2018 (FY18).

These properties, located in Johor and Selangor, have been classified as investment properties in its financial statements, it said.

SKH anticipates that the property development and property investment segments will contribute 25% or more of its net assets or 25% or more of its net profit for FY19.

The group will seek the approval of its shareholders for the proposed diversification in an extraordinary general meeting to be convened.

“Barring any unforeseen circumstances and subject to the approval of the shareholders of SKH being obtained, the board expects the proposed diversification to be completed in the second half of 2018,” said SKH.

This article first appeared in The Edge Financial Daily, on Aug 7, 2018.

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