EP Manufacturing diversifies into property development, undertakes private placement to raise RM56.9mil

NST Mon, Nov 29, 2021 08:03pm - 2 years View Original


KUALA LUMPUR: EP Manufacturing Bhd (EPMB), which is involved in automotive and engineering, is diversifying into the property development business.

In a statement today, the company said it is undertaking a proposed private placement which is expected to raise gross proceeds of up to RM56.9 million.

With part of the proceeds will be utilised to fund its business diversification, the balance will be utilised to increase its production efficiency, equipping itself with the necessary facilities for the assembly of new car models.

EPMB is undertaking disposal and leaseback to monetise its investment in the Glenmarie Properties.

This will be done for a disposal consideration of RM53.5 million.

The Glenmarie Properties comprises two pieces of freehold land with buildings at Bandar Glenmarie with a total gross floor area of approximately 107,214.2 sq ft and 75,163.5 sq ft respectively.

EPMB deputy executive chairman Zulkefly Baharuddin said the injection of fresh funds amounting to RM110.4 million will support the working capital of the company as it moves onto its forward agenda.

"Besides strengthening our presence profiling in Tier 1 automotive business to respective original equipment manufacturers (OEM), we intend to diversify into the property business with a land bank in Sabah that holds a potential gross development value of RM1.4 billion.

"With the placement and disposal of assets, the net cash at hand can be used for further consolidation and expansion activities," he said.

Meanwhile, EPMB's net loss widened to RM7.13 million in the third quarter (Q3) ended September 30, 2021, from a net loss of RM233,000 recorded in the same quarter a year ago.

This was mainly due to the full lockdown under Movement Control Order (MC) 3.0 where the automotive industry was not allowed to operate starting June 1, 2021.

Revenue in Q3 plunged 67.6 per cent to RM41.74 million from RM127.13 million.

For the cumulative six-month period, EPMB's net loss narrowed to RM10.93 million from a net loss of RM14.28 million, while revenue eased 20.4 per cent to RM218.57 million from RM274.69 million.

"Due to factory shutdowns and intermittent Covid-19 cases, we were effectively only able to operate at full capacity for a total of one month in Q3 FY21.

"Thus, our results have been affected because of the MCO restrictions and this is an issue across the board for most industries in the country.

"However, we remain positive on sales recovery for the last quarter of this year after resumption in production and sales activities. Consumer demand is also rising due to the vehicle sales tax exemption which has been extended to June 30, 2022," Zulkefly said.

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