Ecobuilt seeks approval to diversify into property development, building materials trading

PETALING JAYA (June 23): Ecobuilt Holdings Bhd has called an extraordinary general meeting to seek shareholder approval to diversify into property development and the trading of building materials, alongside new shareholders’ mandates for recurrent related party transactions (RRPTs) relating to its construction business and proposed trading activities.

In a Bursa filing today, Ecobuilt said it would propose to expand beyond its existing investment holding and construction-related activities. The accompanying circular stated that the new businesses are expected, once operational, to contribute 25% or more of the group’s net profit and/or result in a diversion of at least 25% of net assets, requiring shareholder approval under Paragraph 10.13(1) of Bursa Malaysia’s Main Market Listing Requirements. 

The circular stated that the diversification is intended to complement the group’s construction activities, broaden its income streams, and reduce reliance on a single business segment.

The circular stated that the group’s construction business recorded losses in recent financial years, which it attributed to lower revenue recognition as projects neared completion, cost overruns arising from higher construction material and labour costs, delays in project execution and certification, and higher provisions for expected credit losses and bad debts.

On the proposed property development business, Ecobuilt said it is evaluating potential joint development and acquisition opportunities in Penang and the Klang Valley. These include an indicative mixed development project in Penang with an estimated gross development value (GDV) of RM196 million and an indicative serviced apartment project in the Klang Valley with an estimated GDV of RM364 million. 

The circular stated that the figures are indicative, no definitive agreements had been entered into as at the last practicable date and there was no assurance the projects would proceed.

In tandem with the diversification, Ecobuilt is seeking two new RRPT mandates. The first covers RRPTs arising from its construction business, including the provision of construction and engineering services by Exo Construction Sdn Bhd to the Sevenco group, with an estimated aggregate transaction value of RM300 million during the mandate period. 

The second mandate, which is conditional upon the proposed building materials trading diversification, covers RRPTs arising from the trading business, including the supply of building materials to the Sevenco group, with an estimated aggregate transaction value of RM10 million.

..........

Read about emerging trends, data-backed insights, growing subsectors, and expert commentaries in EdgeProp print. Subscribe now for your free copy!