PETALING JAYA: Minetech Resources Bhd, via its wholly owned subsidiary Diman KS Chin Sdn Bhd, aims to diversify into the food & beverage (F&B) trading business following a teaming agreement with Vitamin 2U Sdn Bhd to import and trade process food in Malaysia from South Korean food manufacturer Samyang Food Co Ltd.
In the group’s Bursa filing, the agreement states that it will be primarily responsible for product sales to wholesalers and/or retailers, while Vitamin 2U will assume responsibility for the daily operations including sales, marketing, and product delivery, among others.
Minetech said that the teaming agreement provides added opportunity to venture into the F&B industry, creating an additional revenue stream and mitigate its reliance on any particular business segment.
At present, Minetech is principally involved in the production of quarry and bituminous products, provision of civil engineering works and property development activities, trading of goods and services, as well as business activities related to renewable energy and oil & gas industries.
Its financial performance in recent years had decline due to lower contribution from quarry products – one of the two mainstays of its business – due to increasing competition resulting in a downward pressure to its selling price and profit margins.
“The competency and experience of the key management personnel, together with the credentials of Vitamin 2U in the F&B industry are expected to contribute positively to the performance of the new business,” it said.
For its latest financial year ending March 31, 2021 the group had managed to turn around with a net profit of RM924,000 following a loss of RM15.07 million and RM20.43 million reported for FY20 and FY19, respectively.
Minetech stated that it expects the new F&B business to contribute more than 25% of the total net profit of the group or cause a diversion of more than 25% of its net assets moving forward. Hence the board proposed to seek approval from shareholders for the proposed diversification.