JAKEL Group managing director Datuk Seri Mohamed Faroz Mohamed Jakel’s recent entry into ACE Market-listed technology company Sedania Innovator Bhd appears to be a well-planned move by the textile trader and property developer to hedge against market volatility. His entry will also allow the companies to create synergies by tapping into each other’s strengths and expertise.

On May 28, Mohamed Faroz emerged as a substantial shareholder of Sedania following a private placement of 43.53 million shares, giving him a 12.55% stake in the group. On June 1, he bought another 810,000 shares on the open market, bringing his direct stake in the company to 12.77%.

In an interview with The Edge, Mohamed Faroz says that over time, he will continue to up his stake in Sedania. “Investing in technology and healthcare goes without saying, as I seek to build a balanced portfolio of businesses to mitigate any volatility and market downturns, and to preserve capital while taking advantage of growth potential,” he says of his investment in Sedania. It is no secret that the pandemic has taken a toll on most retailers and property developers.

Both Mohamed Faroz and Sedania founder and managing director Datuk Azrin Mohd Noor are optimistic about the prospects of Sedania as it provides an opportunity to collaborate on various levels. Azrin had a 32.74% stake in Sedania as at June 2.

Mohamad Faroz points out that technological development and its adoption have created revolutionary changes in conventional businesses, and the textile trading and retail business of Jakel Group is no exception.

He adds that Jakel has been forced to be proactive and not rely solely on the traditional way of trading textiles, which is through the opening of physical stores. “We are continuously adapting to the new ways of doing business and satisfying the dynamic demands of our customers by increasing our online sales to have borderless reach to our customers and by creating game-changing technological prints of our textile products for more comfortable and environmentally friendly wear.”

These changes include organic-based textiles.

Commenting on Mohamed Faroz’s entry into Sedania, Azrin says the two companies strategically complement each other and will now be able to unleash their respective values. “Traditional businesses have realised the disruption caused by technology. Jakel Group now has a technology partner to self-disrupt and go on the offence rather than defence.”

Jakel Group began its textile trading journey in 1985 and ventured into property development in 2011. The group also has interests in real estate investments and pineapple plantations.

Last year, as Covid-19 started emerging, the group ventured into healthcare. Jakel Group is now the sole distributor for US-based BYD Care’s medical and civil respirator masks (namely N95 and KN95) in Malaysia and has been supplying personal protective equipment and face masks to government bodies and private corporations.

Following this venture, Mohamed Faroz decided to invest in Sedania as he believed the company would be a strategic fit in the overall plan of Jakel Group. Sedania provides technological solutions for green technology, financial technology (fintech), telecommunications technology, the Internet of Things (IoT) and eSports.

“There are many synergistic opportunities that can be explored between Sedania and Jakel Group,” he says. For example, the IoT solutions of Sedania can be introduced and deployed at our existing and future commercial and residential developments by introducing eco-friendly, smart home solutions for sustainable and comfortable living. “Greentech solutions can also be implemented at Jakel Group’s current real estate assets, as well as its future property development projects,” he adds.

Azrin agrees. He says Sedania, through its greentech platform, will empower Jakel Group and help it save up to 30% in electricity consumption at its 600 or so stores. Apart from being energy efficient, Sedania’s IoT solutions will provide the group’s property division with the capability to build smart homes and smart buildings.

Jakel Group has real estate projects with a gross development value of more than RM7 billion, which are expected to be launched in two or three years when the property market recovers.

Mohamed Faroz is also bullish on Sedania’s fintech solutions as it will be able to benefit from Jakel Group’s six million customer base, one million of whom are customers of a premium fashion brand for women called Ariani. Here, Sedania will provide Jakel with the fintech platform necessary to provide credit or financial assistance to the latter’s six million customers as well as to be able to market its premium organic baby brand called Offspring to its customers.

He points out that the customer base for the group’s women’s and childcare products are similar, particularly among customers of Araini, a modest fashion wear range, who comprise an urban and premium market that includes chic and sophisticated mothers.

On the cards are plans to launch organic-based children’s garments. This, says Mohamed Faroz, will offer synergistic value to Sedania’s recently acquired Offspring brand.

Azrin is equally excited about Mohamed Faroz’s entry as it means that Sedania will be able to leverage Jakel Group’s existing overseas network to expand into 25 countries, such as China, India and the Gulf Cooperation Council countries, to market its Offspring products. Offspring is currently available in 10 countries, including Malaysia, Singapore, Brunei, the Philippines, Russia and the US.

Earlier this year, Sedania diversified into healthcare technology and consumer products through the acquisition of a 51% stake in Offspring Inc Sdn Bhd. Offspring Inc’s premium organic and eco-friendly baby products, which include diapers, wet wipes, baby care and household products, are made in Australia. Over 60% of the product revenue comes through online sales.

Meanwhile, for the first quarter ended March 31, Sedania posted an all-time-high net profit of RM4.21 million, against a net loss of RM1.82 million in 1QFY2020. This was on the back of RM17.07 million in revenue, compared with RM2.78 million in the previous corresponding quarter.

The improved performance is attributed to contributions from its greentech and healthtech segments following the group’s strategic initiative to find new business opportunities. The greentech segment recorded revenue of RM10.16 million while healthtech posted revenue of RM5.34 million.

It is worth noting that last Thursday, Sedania announced that it had secured contracts from Telekom Malaysia Bhd to expand its greentech solutions to 34 sites from 10 currently.

Moving forward, Sedania is confident of maintaining a steady growth momentum with the inclusion of the healthtech segment, which is expected to supplement its existing businesses and mitigate the risk of relying on its ongoing businesses.

Last Friday, Sedania’s share price gained 12.5 sen to close at RM1.12, giving it a market capitalisation of RM388.85 million.