1 Utopia to unveil business diversification plan in first quarter 2016

PETALING JAYA: Loss-making 1 Utopia Bhd is set to unveil its diversification plan in the first quarter of 2016, with a view to reduce dependency on the existing ICT retail business, which has been operating in a challenging environment.
Speaking to reporters after 1 Utopia's EGM yesterday, executive director and finance director Kenny Khow Chuan Wah said the company is still finalising its new business plan, which could involve a new or ICT-related business. "We're still exploring the opportunity. We'll make the announcement by the first quarter of next year," he said.
In addition, Khow said, the company is looking to expand its industrial and mobile hydraulic equipment business, which currently contributes only 5% to total revenue. He explained that the project-based hydraulic business, which could fetch higher margins, is expected to contribute more to the company, to mitigate the weakening ICT business.
"We try to re-energise that because margins are better. It's quite a niche industry," he said, adding that the company is also in talks to acquire peers in order to grow.
Nevertheless, Khow stressed that the ICT retail segment will remain the company's core business despite the diversification, even as he acknowledged that it will be a challenging year in 2016, particularly with the opening of the Mara Digital Mall.
"First, you have the GST (Goods and Services Tax), we're badly hit, then you had the Low Yat incident as well as the MRT (Mass Rapid Transit) construction works," he added.
1 Utopia's business is predominantly based at Plaza Low Yat, Kuala Lumpur. It also has outlets at Sunway Pyramid and Mid Valley Megamall.
For the 16 months ended March 31, 2015 (FY15), 1 Utopia reported a net loss of RM13.18 million versus a net profit of RM1.11 million in FY13, mainly due to lower margin from its ICT business, especially from the sale of notebooks and smartphones.
For the six months ended Sept 30, 2015, its net loss widened from RM1.92 million to RM11.35 million.
Khow expects the company's financial performance to only improve in the next financial year after the new business venture.
Speaking about the strategy to turn around the ICT business, he said the company is consolidating its business at Plaza Low Yat as well as moving into the retail management segment that does not require many staff.
1 Utopia shareholders yesterday gave the green light for the proposed name change to "Sterling Progress Bhd" to reflect a new corporate identity following the emergence of a new substantial shareholder Leong Seng Wui, who is also the executive director of the company.
Leong, however, disposed of a 1.87% stake in 1 Utopia last Thursday, bringing down his shareholding to 4.19%, which is held through FNS Avenue Sdn Bhd.