Astral Asia to diversify into e-commerce business

TheEdge Tue, Oct 20, 2020 11:22pm - 6 months ago

KUALA LUMPUR (Oct 20): Astral Asia Bhd (AAB) has proposed to diversify its core businesses to include e-commerce and related activities with a total estimated initial investment of RM500,000.

AAB said the RM500,000 investment would be used for website setup, storage equipment and etc, inventory cost as well as marketing cost such as digital ads, social media management.

"The company intends to fund the above estimated financial commitment through a combination of internally-generated funds and bank borrowings," it said in a filing with Bursa Malaysia today.

It said the proposed diversification provides an opportunity for the company to venture into the e-commerce business and diversify its earnings base by providing an additional income stream, thus reducing dependency on its existing businesses.

"The board is of the view that the proposed diversification will add value and contribute positively to the earnings of the company, thereby enhancing value to its shareholders,” it said.

It noted that the COVID-19 pandemic has led to major shifts in business conditions and also changed the daily habits and consumption patterns of consumers, resulting in an increase in demand for online services across various business segments.

"More consumers are moving their purchases online and as a result, e-commerce businesses are expected to experience sizable growth," it added.

It said the proposed diversification would take immediate effect upon obtaining the approval from the shareholders of the company at an extraordinary general meeting to be convened.

AAB said Ray Lim Kuan Hwang, a director of its wholly-owned unit, Clean Link and Tasja Development Sdn Bhd, has been identified as the key management personnel to lead and oversee the operations pertaining to the group's e-commerce business and other related activities moving forward.

“He was involved in the innovation and operation of new businesses and to date, he has founded and operated more than five new business ventures outside the company,” it said.

Meanwhile, AAB said its earnings have been declining in recent financial years due mainly to lower crude palm oil (CPO) commodity prices and lower production of fresh fruit bunches (FFB).

"The management expects the slowdown in the company’s plantation business to continue as global demand for palm oil is likely to decline due to the anticipated weaker global economy in year 2020. The CPO commodity price is also expected to remain volatile in year 2020," it said.

AAB is involved in the operations of oil palm estates, investment holding and development, civil engineering and building construction.

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