KUALA LUMPUR (Sept 18): JAG Bhd said its wholly-owned subsidiary, Jaring Metal Industries Sdn Bhd (JMI), has entered into a joint venture (JV) agreement with Bubblelab Laundry Sdn Bhd (BLSB) and BLSB director Wong Chan Kong for the management and operation of a 24-hour coin-operated laundry business.

According to its filing with the exchange, the parties will invest in JAG Nasmech Sdn Bhd, the JV company for the venture. JMI will own an 80% stake in the JV company, while BLSB and Wong will each hold a 10% stake.

"The proposed JV will enable JAG and its subsidiaries (via JAG Nasmech) to venture into the self-operated laundry business wherein the business is expected to provide an additional source of income and contribute positively to the future financial performance of the group," it said.

Under the agreement, JMI will advance RM4 million to JAG Nasmech for the development of the business, to open at least 10 self-operated laundry outlets in strategic locations in Malaysia.

"The cost shall comprise, among others, cost of the machineries, equipment, rental and deposits, renovation and any other costs associated with the setting up of the self-operated laundry outlets," said JAG.

The investment by JMI will be financed entirely by internally-generated funds.

Going forward, the company expects the demand for laundry services, such as through launderettes or self-operated laundry outlets, to continue growing as self-operated laundry outlets are becoming widely accepted by consumers.

JAG also noted that the business is not human capital intensive as it only requires a few employees to oversee and manage the day-to-day operations.

JAG closed unchanged at 10 sen today for a market capitalisation of RM108.46 million.

Year-to-date, its share price has more than halved from 16 sen.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)