This article first appeared in The Edge Financial Daily on February 6, 2018

KUALA LUMPUR: Poultry company DBE Gurney Resources Bhd is diversifying into the property development industry, via the joint development of a mixed affordable project in Bota Kanan, Seri Iskandar, Perak with an estimated gross development value of RM24.5 million.

DBE’s wholly-owned subsidiary DBE Development Sdn Bhd will undertake the proposed joint development with Misi Jutari Sdn Bhd.

Under the proposed joint venture (JV), DBE Development and Misi Jutari will be entitled to 75% and 25% shares respectively of the net development profit.

Spanning 3.765ha, the project features 10 one-storey semi-detached houses, 85 one-storey terraced houses, three two-storey shophouses and 16 one-storey shophouses.

In a filing with Bursa Malaysia yesterday, DBE Gurney said the move was for the group to diversify into other industries with strong growth prospects instead of relying solely on its core business.

It said the future prospects of the existing business are expected to remain challenging, pointing to the losses for the financial years 2012 to 2015 ended on Dec 31.

“This trend may not augur well for the future financial performance of the DBE Group. In view of the foregoing, the company has identified the development projects as new business opportunities for the group to diversify its earnings base and reduce its dependency on its existing business,” said DBE Gurney.

In a separate statement yesterday, DBE Gurney executive director Datuk Doh Jee Ming said the group intends to diversify into the construction-related business to complement the property development. “We will undertake construction works of identified projects/contracts to be procured from time to time.”

It expects the proposed joint development to contribute more than 25% of its net profit and may result in the diversion of 25% of its net assets to the new operations.

“The board believes that the proposed joint development is expected to contribute positively to its future earnings and improve the financial position of the DBE Group.

“The additional revenue contribution from the proposed joint development is expected to enhance the company’s profitability and returns on shareholders’ funds, and improve the shareholders’ value over the medium to long term,” said the group.

The group expects to complete the proposals by the second quarter of 2018.