KUALA LUMPUR (June 25): HB Global Ltd today announced that it has received its shareholders' approval for the proposed acquisition of a 60% stake in 5G infrastructure firm Forward Resources and Construction Sdn Bhd (FRC) worth RM66 million.

In a statement, the group also said its shareholders have approved the proposed diversification into construction and engineering solution services which offer a new revenue and income stream for the group and provide a sustainable long-term earnings growth potential.

HB Global added FRC was previously awarded with two projects worth RM1.1 billion, with a gross profit margin of 15% to 20%.

Following the acquisition, the group highlighted FRC will provide a cumulative profit guarantee of RM20 million for two years.

"FRC has been appointed the independent contractor and expected to complete the projects within three years. The scope includes the supply, delivery, installation, testing, commission, operation, maintenance, and deployment of the 5G infrastructure and solutions across Malaysia," it said.

HB Global executive director Lee Ping Wei said the shareholders' approval during today's extraordinary general meeting is an important milestone for the group as it presents a strong and stable alternative income stream to the group with the acquisition of FRC.

"We are thrilled that it is now finally approved by the authorities and shareholders. This is part of our strategies to reduce our reliance on the existing food business.

"The venture will help both HB Global and FRC to fulfil its potential and capabilities in the development of the 5G infrastructure in Malaysia," he said in a statement.

Lee also said that the group envisions transforming itself to become a high-dividend payout company in the near future, supported by the strong recurring income from the projects offered from the proposed diversification plan.

"We are very excited with our diversification into construction and engineering solution services as they offer a new revenue and income stream for the group. These projects offer a long-term earnings growth potential for HB Global, that are both sustainable and profitable.

"These projects provide visibility on the group's earnings and cash flow generation from FY21 to FY27," he said.

Lee is also confident that HB Global is in a strong position to secure some of these contracts with the telcos.

"Given the demand for fibre optic cable, the business has gained momentum with the government's push to roll out commercial 5G services by this year end," he added.

According to the group, FRC is mainly involved in the provision of construction and engineering solution services, including 5G infrastructure, for the telecommunications industry.

Some of the notable clients of FRC are Maxis, Celcom, Digi, Telekom Malaysia, Edotco, as well as Time Engineering.

At noon break today, shares in HB Global ended 0.5 sen or 1.28% lower to 38.5 sen, giving it a market capitalisation of RM216.22 million.