Takaso looking at property venture

PETALING JAYA: Loss making condom maker Takaso Resources Bhd, which received shareholders' approval to venture into the construction industry, plans to diversify into the property business to boost earnings and turn around the company into the black.
At its EGM yesterday, Takaso shareholders' also gave their go ahead for the company to accept a letter of award for the construction of a commercial building in Kuala Lumpur with a contract value of RM37.44 million.
Following that, Takaso chief financial officer Su Seong Yeen said the construction business will contribute significantly to the financial year ending July 31, 2016 (FY16) and is hopeful of a turnaround for the group.
She expects the construction segment to contribute more than 50% to the group's earnings over the next two to three years.
"Construction and property are quite inter-related, if we've the capacity to do the construction, we may also be able to do property," Su told reporters after the EGM here yesterday when asked of the rationale of going into the property sector.
She added that the group has started looking to acquire landbank.
However, commenting on the RM9.5 million aborted plan of acquiring Dynavance Construction Sdn Bhd which was announced on Tuesday, Su said this is because Takaso needs working capital for its construction job that has been secured.
"After taking the company's cash flow into consideration, we have to put the acquisition on hold first," she noted.
Su said the group's cash flow is quite dependent on the construction job and did not rule out the possibility of pursuing a fund raising exercise.
Despite that, she said the group is still interested in buying construction outfits if opportunities arise.
Takaso executive director Ong Kah Hoe opines that the group's construction business will not be affected by a slowdown in construction activities as its focus is on the affordable housing.
"Our construction team is securing more projects from the developers, we're in discussion right now," Su noted.
Takaso executive chairman Francis Tee Tze Chern, meanwhile, said the group has no intention to dispose of any of its existing business, which is mainly involved in the condom and baby product segment.
"This is a very good and long term business, we're not considering selling our business. The performance should improve this moment, but unfortunately we're trapped into the geopolitical risks in Europe and the Middle East," he said, adding that the group has been putting a lot of effort to establish its brands in the overseas markets.
According to Tee, China and the Middle East are the two biggest export markets for rubber products, representing 30% to 40% of the total export. Domestic market also makes up about 30% to 40%.
Takaso has been suffering losses over the past few years, with a net loss of RM5.95 million for the financial year ended July 31, 2014.
For the second quarter ended Jan 31, 2015, it reported a narrowed net loss of RM787,000 versus RM1.13 million in the previous corresponding period. Its six-month net loss stood at RM1.2 million compared with RM2.1 million a year before.