KUALA LUMPUR: Something is brewing in Anzo Holdings Bhd, which manufactures and markets timber products for housing and building projects in Malaysia.
According to sources, a foreign investor was eyeing a stake in Anzo and it may also come in to inject a new business.
"Anzo has in the last two years been actively seeking new business to diversify its income stream after posting losses for many quarters. It has not been able to make a profit from its existing businesses because of weak market conditions," said a source close to Anzo.
The company, the source added, was on the right track now as it had been able to turn around in the last quarter despite the movement control order (MCO) which came into effect in March.
"Anzo is aware that property development will take a longer time to recover from the Covid-19 pandemic while construction activities have slowed down in the country. It is eyeing new business to take it forward and remain profitable," the source said.
Anzo closed 3.5 sen or 41.18 per cent higher today at 12 sen.
It was the third highest traded stock volume-wise on the local stock exchange. A total of 189 million shares were traded.
The closing price of 12 sen was also Anzo's highest in the last 24 months.
"Many Bursa-listed companies have been diversifying since the outbreak of Covid-19 and the majority have ventured into healthcare and healthcare-related industries. It is unclear what business Anzo is planning to venture into but it will be long term," said the source.
In a recent filing with Bursa Malaysia, Anzo said it was actively pursuing measures to manage its operating costs and revising the business plans to mitigate any potential negative impact arising from the Covid-19 pandemic.
The company posted a revenue of RM8.37 million in the third quarter ended April 30 2020, almost six times more than the preceding year corresponding quarter.
It said this was mainly due to the contribution made from the trading section of the construction division, which provided RM7.5 million (2019: nil) turnover during the quarter.
The timber division was badly affected by the MCO. This was shown by its contribution of only RM900,000 (2019: RM1.5 million) turnover during the period.
Anzo said that in line with the improved operating results, it had achieved a minor pre-tax loss of RM2,000 compared to a pre-tax loss of RM1.03 million in the previous year's corresponding quarter.
For the year to date, and as a result of the improved trading business, the company's revenue and gross profit increased to RM15.51 million and RM1.38 million respectively.
As a result, its pre-tax loss reduced by almost half, from RM2.7 million in 2019 to RM1.39 million in 2020.
"We remain cautious of the prospects for the current financial year as the economy continues to face various headwinds especially with the coronavirus outbreak," it said.