KUALA LUMPUR: SMTrack Bhd has proposed to diversify into three new businesses, namely property, oil and gas (O&G) as well as food and beverages (F&B).
In a filing with Bursa Malaysia, SMTrack said the proposed diversifications are in line with the group’s objective to expand its revenue stream by diversifying into other viable businesses.
"We believe that by venturing into the property related industry, it should provide the group an extra revenue stream and earnings base given the optimistic outlook within the property development sector.
"The sector is gradually recovering from the pandemic following the reopening of the economy and country borders,” it said.
SMTrack also noted that by venturing into the support services for the O&G industry, it can improve the group’s financial performance and also reduce its dependence on the existing businesses.
On the F&B business, SMTrack said the segment is envisaged to be one of the group’s stable business.
The F&B segment is expected to contribute positively to its earnings considering the profit guarantee provided under the share sale and purchase agreement (SSPA) and the favourable outlook and prospects of the F&B service industry, said the company.
On June 23, 2022 - its wholly owned subsidiary SMT Turbojet Resources Sdn Bhd has been appointed a project management consultant to assist Menara Rezeki Properties Sdn Bhd (MRPSB) in a project involving a proposed development of three high-rise buildings which consist of both residential and retail units.
"We acknowledge that SMTrack has no prior experience in property related businesses such as property development, property management and construction business. Therefore, SMTrack proposes to engage ESA International Sdn Bhd to jointly undertake the scope of work under the Property Consultancy Agreement considering the experience of ESA International and its subsidiaries (ESA Group) in property related projects," it said.
ESA Group is principally involved in the provision of consulting services for all areas of civil and structural engineering.
On the O&G segment, SMT Turbojet had entered into a Project Consultancy Agreement with Eight Safety Consultancy Sdn Bhd (8SC) as the administrative consultant for petroleum O&G industry safety product purchase process or any traceability solutions compatible with the system to the targeted end users.
It said SMTrack Group currently does not possess sufficient experience, expertise and capability to carry out its entire obligations under the O&G Consultancy Agreement in relation to the Health, Safety, Security and Environment (HSSE) consultancy project secured by 8SC as it was SMTrack Group’s first foray into providing consultancy service for O&G industry.
"In view of the foregoing, SMTrack Group proposes to engage Plant & Power Engineering Sdn Bhd (PPESB) to jointly undertake SMT Turbojet’s obligations under the O&G consultancy agreement in relation to the HSSE consultancy project given its expertise and experience.
"Moving forward, we intend to expand internally by hiring the necessary expertise to ensure adequate resources are available to effect any project secured pursuant to the O&G consultancy agreement,” said the group.
PPESB is principally involved in the provision of heating, ventilation, air conditioning and refrigeration system for the marine or naval, offshore O&G industry. It also provides specialist services in various areas such as health and safety, environmental management and risk management.
On the F&B segment, the company proposes to undertake the diversification of the existing business into the F&B business via AHA Food & Beverage Sdn Bhd (AHAFB), a subsidiary of SMT Foods & Beverages Sdn Bhd (SMTFB) which is a wholly owned subsidiary of SMTrack.
On Oct 25, 2022 - SMTFB had entered into a SSPA with Abdul Halim Ahmad (vendor) for the acquisition of 60 ordinary shares in AHAFB from the vendor, representing 60 per cent of the entire issued share capital of AHAFB for a total purchase price of RM500,000.
AHAFB is the operator of ‘Nasi Ahmad’ restaurants which specialise in selling nasi kandar.
Currently, 'Nasi Ahmad' has two operating outlets in Selangor and the group is planning to expand the business by opening additional 'Nasi Ahmad' outlets across the Klang Valley and Putrajaya.
"Although the group has no prior experience in the F&B business, the board expects the group to leverage on the brands, standard operating procedures, recipes and training to be provided by the existing management of the acquired business,” it said.
After taking due consideration, SMTrack anticipates the proposed diversifications to contribute 25 per cent or more to the net profits of the group. - Bernama
