Niche Capital seeks to diversify into construction, property businesses

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KUALA LUMPUR (Jan 6): Jeweller Niche Capital Emas Holdings Bhd has proposed to diversify its existing core business to include construction and property related businesses.

It is also proposing recurrent related party transactions to be entered into by Niche and its subsidiaries and associates with related parties pursuant to the proposed diversification.

In a bourse filing today, Niche said the proposed diversification is to improve the group’s financial performance and shareholders’ value. "The proposed diversification will expand the revenue stream and earning base of the group."

The group has made a loss for its latest financial year ended June 30, 2019, which it attributed to the weakening economy and market demand for jewellery products.

"The management expects the current trend to continue.

"To improve the group’s financial performance, Niche proposes to diversify its existing business to include construction and property related businesses to enhance revenue and profitability," it added. 

To grow and expand its new construction and property-related businesses, Niche proposes to bid for construction works from Beta Ocean Group Sdn Bhd, a building, civil and mechanical engineering contractor, as well as other contractors, property developers and commercial property owners.

Niche major shareholder and executive director Julian Foo Kuan Lin and  executive director Loh Siew Jiann jointly own Beta Ocean.

"Niche and Beta Ocean have been in discussion on working together," said Niche.

Beta Ocean had on Dec 3, 2019 been awarded a RM500,000 contract to Wawasan Pasifika Sdn Bhd, a wholly-owned subsidiary of Niche, to provide construction management services.

Beta Ocean had also on Dec 26, 2019 issued a letter of award of RM10 million to Pembangunan Maju Setia Sdn Bhd, a wholly-owned subsidiary of Niche, to undertake construction of structural works. The acceptance of this letter is subject to Niche receiving its shareholders’ approval for the proposed shareholders’ mandate.

"Niche management expects that overtime, the group’s construction and property related businesses should grow and may result in a diversion of 25% or more of Niche’s net assets from the group’s existing business/operation to the proposed new construction and property related businesses," the group added.

Niche also noted the uncertainties and challenges faced by the local construction and property industry.

"The board will manage the group’s proposed foray into this industry cautiously. The board believes that pursuant to the proposals, the construction and property related businesses would provide Niche with a new source of revenue which in turn should contribute positively towards its earnings.

"The proposals are expected to contribute positively to the group’s overall earnings moving forward," said Niche. 

Barring any unforeseen circumstances, the board expects the proposals to be completed by the second quarter of this year.

Shares in Niche closed unchanged at 6 sen today, with a market capitalisation of RM42.15 million.