MQ Technology Bhd, an industrial mould producer, plans to expand into property development with a flagship project in Klebang, which is one of the popular beach and resort development area in Melaka.
The property business, according to the company, will allow it to extend its revenue base and create recurring rental income.
It expects the business to contribute 25 per cent of net profit in the future.
The company stated in a bourse filing yesterday that this will help minimise its reliance on the challenging manufacturing market, which has been exacerbated by increased competition from current industry players.
MQ Tech and its subsidiaries manufacture innovative high-precision moulds, as well as magnetic coils for hard disc drives, and car spare parts, among others.
The company had ventured into the theme park industry which was approved by its shareholders on June 13, 2016, but it had not commenced operations of its theme park business in view that the conditions precedent of the Previous Agreements remain unfulfilled, according to the Jan 26 filing.
For the 18-month financial period that ended June 30, 2020, the company posted a net loss of RM12.62 million on revenue of RM12.65 million.
MQ Tech, through its wholly-owned subsidiary Star Acres Sdn Bhd (SASB), is acquiring 7.155 acres of reclaimed land in Klebang for RM19.5 million from Cash Support Sdn Bhd to lead its property operations.
The company stated in a bourse filing yesterday that if the planned acquisition is completed, it intends to create two blocks of 27-story serviced suites with a total of 1,000 units, as well as 80 shop lots, with a gross development value of RM275 million.
The project's estimated gross development cost is expected to be RM200 million, with a gross development profit of RM75 million.
It said the proposed development plans and ancillary applications are targeted to be submitted to the relevant authorities after the completion of the proposed acquisition, which is expected to be in the third quarter of 2023.
"The proposed development is expected to commence in the first quarter of 2025 and is expected to be completed within three years from the commencement date," it said.
While SASB will be the registered owner of the property, MQ Tech stated that the property business will be operated by its dormant wholly-owned subsidiary, MQ Builders Sdn Bhd.
Tong Sian Shyen, the company's managing director, who has managerial experience in a variety of industries including manufacturing, information technology, construction, and property development, would oversee the proposed diversification's execution, it said.