This article first appeared in The Edge Financial Daily on May 25, 2018

KUALA LUMPUR: Kumpulan Perangsang Selangor Bhd (KPS) says the business expansion of its subsidiary Century Bond Bhd is expected to contribute to higher earnings for the group in financial year 2018 (FY18).

Its acquisition of electronic manufacturing services player CPI (Penang) Sdn Bhd, which was completed at the end of the first quarter of FY18, will also be immediately value-accretive to the group’s consolidated FY18 revenue, the group said in a statement yesterday.

KPS said CPI’s global clientele spans the automotive, healthcare and telecommunications industries as well as the industrial and consumer industries. “Fifty per cent of CPI’s annual revenue is derived from exports, while local sales are primarily to Malaysia-based subsidiaries of multinational groups,” said KPS.

As for Century Bond, the group said in the statement it is seeking to further enlarge the subsidiary’s footprint in the non-cement sector of Malaysia.

“The recently signed joint venture between Century Bond and China-based Honda Printing Holdings Ltd to produce offset carton boxes enables Century Bond to extend its value chain further into offset carton boxes, where the outer layer of the box is laminated by a printed sheet to provide finer and more vibrant printing,” KPS said.

KPS chief executive officer Ahmad Fariz Hassan said the group is entering a new era of earnings diversity and its reach has extended to new frontiers globally, where revenue from overseas makes up approximately one-third of the group’s revenue.

“Furthermore, these companies have proven [their] expertise in their respective fields, with capacity to extend their lead and command strong double-digit margins. This bodes well for KPS’ earnings quality and ability to generate increasing returns for shareholders,” he added.

KPS has also set a new direction for its King Koil licensing business in the US market by setting its first manufacturing plant in Phoenix, Arizona, for direct distribution in the Western region of the US.

It has formed a strategic partnership with Blue Bell Mattress to manufacture and distribute King Koil products in the Midwest region of the US.

“The new direction will enable the group to command greater control of distribution and product quality, and grow its market share on King Koil’s home ground in the US,” the statement read.

Meanwhile, in KPS’ annual general meeting yesterday, shareholders approved the final dividend payout of 4.25 sen per share in respect of FY17, which amounts to RM22.8 million or 38.8% of the group’s FY17 net profit attributable to shareholders.

Going forward, KPS said it will continue its steadfast commitment to unlock the full potential of investee companies via value-creation plans.