KUALA LUMPUR (Feb 5): DBE Gurney Resources Bhd has proposed to diversify into property development and construction via a joint development with Misi Jutari Sdn Bhd (MJSB) for a mixed development project in Perak.
The project, developed on a 3.68-hectare land in Bota Kanan in Perak Tengah district, comprises 95 units of semi-detached and terrace houses and 19 units of shop houses.
DBE said the move was for the group to diversify into other industries with strong growth prospects instead of relying solely on its core business, which is primarily in the operation of poultry breeding farms and trading of related products.
It said the future prospects of the existing business is expected to remain challenging, pointing to the losses for the financial years ended Dec 31, 2012, 2013, 2014 and 2015.
"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 in a filing today.
The group added that it also intends to procure construction works from time to time but has yet to secure any projects or contracts for the construction business.
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.
DBE's share price closed unchanged at 3.5 sen, giving a market capitalisation of RM107.13 million.