Loss-making Compugates Holdings Bhd has proposed diversifying into the property development and agarwood plantation business to lessen dependence on its trading and services sector, which currently accounts for the majority of its revenue.
It's 70 per cent-owned subsidiary Compugates Development and Mining Sdn Bhd (CDM) inked a joint venture agreement (JVA) with Jade Classic Sdn Bhd in November 2017 to develop a 62-acre plot of land in Selangor.
Compugates said that Jade Classic will serve as the developer for the general planning, building, and completion of the JVA development.
As of March 28, the development is in the earthworks stage and is 65 per cent complete.
According to a filing to the stock exchange, CDM will be eligible to a portion of the project's overall RM585 million gross development value (GDV).
Compugates, which has experienced a loss for the past seven straight fiscal years, anticipates that sales will start for Phase 1 of the development, with a GDV of RM230 million, in the second half of 2023.
The company estimates that its net profits could increase by at least 25 per cent as a result of the Phase 1 GDV entitlement of about RM46 million and/or a future share of GDV to be received from the development.
The planned diversifications are anticipated to be implemented in the second quarter of 2023, barring any unanticipated events, and subject to necessary shareholder and other regulatory approvals.
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