PETALING JAYA: Joe Holding Bhd
has proposed a diversification into trading and food and beverage (F&B) businesses besides reallocating proceeds from earlier fund-raising exercises as it seeks to turn around its financial performance.
In a filing with Bursa Malaysia yesterday, the group said it has been loss-making since the financial year ended March 2023, with revenue declining following the disposal of its valve-regulated lead-acid battery segment and softer contributions from its core automotive batteries business.
It added that its recent performance was affected by “lower margins for products sold, challenging business environment and increased operating expenses”.
Against this backdrop, Joe Holding planned to diversify into the trading and supply of building materials and information technology equipment particularly for construction projects and data centre developments.
The company said the move would allow it to capitalise on a booming segment with favourable long-term prospects, supported by strong growth in Malaysia’s data centre market and rising digital infrastructure investments.
The group intended to leverage its management’s business networks to secure supply contracts and improve pricing terms with suppliers.
Over time, it expected the trading segment to provide a steady stream of revenue and profit although it acknowledged that the business is still in its early stages and financial contributions have yet be reliably estimated.
In addition, it is proposing to venture into the F&B segment, with plans to establish outlets within its existing properties in Desa Sri Hartamas, Kuala Lumpur.
The initiative was aimed at fully utilising its properties, thereby improving the overall productivity and value of its assets.
The concept, which could include Malaysian fusion or bistro-style dining, remained at a preliminary stage and could be refined following further studies.
The diversification came as the group reassesses its glove manufacturing business, which has been placed under strategic review due to industry headwinds, including oversupply, intensified competition and low average selling prices.
To support its new ventures, Joe Holding planned to reallocate RM70.27mil in unutilised proceeds from its 2021 private placement and rights issue.
Of this, RM29mil has been earmarked for the trading business, RM6mil for the F&B expansion and RM34.97mil for the repayment of bank borrowings.
The company noted that the proposed diversification could eventually contribute at least 25% of its net profits or net assets, underscoring its strategic importance.
Despite inherent risks, the board said the initiatives were aligned with its objective to “seek new viable business opportunities and additional income sources”.
Shareholder approval for the proposals will be sought at an upcoming EGM, according to Joe Holding.
