Grand-Flo expands property portfolio

KUALA LUMPUR: Grand-Flo Bhd plans to expand its property portfolio via Vortex Business Park, a mixed development in Batu Kawan, Penang with a gross development value (GDV) of RM220 million.

The group will acquire 50% plus one share in the equity of Innoceria Sdn Bhd, which holds the rights and interest in the Batu Kawan development, for RM15 million. The investment will come with a profit after tax guarantee of RM5 million for Grand-Flo in the financial year ending Dec 31, 2014 (FY14) and RM10 million in FY15.

Grand-Flo group managing director Derrick Tan told reporters after its annual general meeting yesterday that the acquisition of Innoceria would likely be completed in August this year.

The group expects Vortex Business Park and its maiden project Alma Bukit Mertajam to contribute 20% to its profit mix in FY14. The Alma project, which Grand-Flo is undertaking through its 52% stake in Jalur Bina Sdn Bhd, consists of 76 zero lot bungalow houses with a GDV of RM63 million.

“We are targeting to launch Alma in July. Out of the total of 76 units available we have a tentative pre-booking of 33 units,” said Tan.

The total GDV of the group’s two property projects is approximately RM283 million, with a development period of three years.

Grand-Flo plans to venture into the Thai telecommunications industry via its 23.14% Thai associate, Simat Technologies Public Co Ltd, which is primarily involved in the provision of fibre optic high-speed Internet services in Thailand.

Tan said the company is involved in the laying of fibre optic cables in Chiang Mai and Korat City in Thailand.

“We recently teamed up with two more provinces, Ubon [Ratchathani] and Hua Hin province, where we will be providing marketing and customer service support, and also the Khon Kaen province, bringing our presence to a total of five provinces,” said Tan.

He said the company targets to reach 200,000 Internet subscribers in the five provinces, as each province is expected to rake in approximately 40,000 subscribers. According to Tan, the venture needs two years to break even with profit expected only in the third year.

Grand-Flo expects the remainder of its profit mix, sans its property division, from its core businesses in enterprise data collection and collation system (EDCCS) and labels operations, which fall under the umbrella of its tracking solutions and labels division.

Its EDCCS segment currently has a targeted order book of RM20 million in FY14.

Tan: We are targeting to launch Alma in July.

“We are quite busy with our existing customers as most of them are upgrading their systems to prepare for the impending goods and services tax,” said executive director Ping Liong Cheng, adding that government-linked companies account for 30% to 40% of the group’s customer base.

“I believe our market share in terms of the tracking solutions business is around 40% to 50%,” said Ping.

On its overseas expansion plans, Tan said the group will increase its stake in Vietnamese entity High Rich Trading & Service Corp, which is part of the group’s barcode labels division, to 70% by year-end from 40% currently.

Grand-Flo reported a net profit of RM13.24 million in FY13 on revenue of RM89.65 million. Its net profit for the first quarter of the year was RM3.34 million. The company had a market capitalisation of RM112.5 million as of yesterday.


This article first appeared in The Edge Financial Daily, on June 25, 2014.