PETALING JAYA: Konsortium Transnasional Bhd has proposed a diversification of its existing core business to include construction and construction related activities.
As part of the proposed diversification and to facilitate the group’s foray into the construction business, its wholly owned subsidiary Transnational Builder Sdn Bhd today entered into agreements with Misi Jutari Sdn Bhd and Hektar Muda Sdn Bhd respectively for the acceptance of construction contract works amounting to RM125.1 million.
Currently, the group is principally involved in provision of express bus services in Peninsular Malaysia as well as stage bus services in Negri Sembilan. The group’s transport business has been making losses for the past three financial years as well as for the financial period ended June 30, 2021.
“The diversification is sought as the board reasonably expects the construction business to contribute 25% or more of the net profit of the group or cause a diversion of 25% or more of the group’s net assets moving forward.
“Whilst the group will continue with its existing transport business, there is great uncertainty over the group’s future prospects and operations primarily attributable to the Covid-19 pandemic which has created significant challenge to the group’s transport business. Thus, the construction business serves to mitigate the risk of overdependence on its transport business and at the same time is envisaged to contribute positively to the group’s earnings and strengthen its financial position in the long term,” it said.
Additionally, the company is also able to leverage on the expertise of its key personnels in undertaking the construction business, which is expected to augur well for the group’s financial performance.
Notwithstanding the current economic uncertainties, subdued domestic growth and outlook of the construction industry, the company is cautiously optimistic on the prospects of the construction industry in Malaysia. Such optimism arises from the expected construction contracts to be awarded to the group of RM125.1 million arising from the construction awards as well as the expected recovery of the construction sector in 2022 supported by acceleration and revival of infrastructure projects, increase in public investment and recovery in the housing sector.