KUALA LUMPUR: Office furniture maker AHB Holdings Bhd has been seeking for new businesses like real estate development to diversify its revenue sources as it has been in the red for several quarters.
For the second quarter ended March 31, 2023 (2QFY2023), AHB's net loss grew 57.41 per cent to RM3.7 million from RM2.35 million a year earlier.
Revenue declined 5.6 per cent to RM1.23 million from RM1.3 million.
In February this year, AHB obtained its shareholders' approval to diversify into property development through the acquisition of 3,849.25 square metres of land in Taman Yarl, Kuala Lumpur, for RM9.2 million for a planned residential development.
The acquisition of the Taman Yarl land was completed on June 13, 2023, it said in a filing with Bursa on June 22.
AHB said that it will make an effort to submit applications and secure the required permits in order to carry out the development's remaining works.
The company also said it would keep looking at new business options to add to its existing furniture and real estate development businesses.
AHB encountered difficulties in its trading of office furniture and office interior products due to increased costs associated with buying furniture from suppliers as a result of rising prices for raw materials like metal and plastic, as well as increased competition among players in the furniture industry (both locally and internationally).
Due to rising prices in the fiercely competitive furniture industry, the company now wishes to diversify into other industries, such as the trade of machinery, equipment, and building supplies.
"The new trading business is complementary to the recent diversification into the property development business, which will require the sourcing and procurement of raw materials for its development projects," the company said in the June filing.
AHB said that the proposed diversification is consistent with its goal of developing an additional income stream in response to the company's "lacklustre" financial performance and to lessen its reliance on the furniture industry as its sole source of income.
It said that the diversification is anticipated to divert 25 per cent or more of its net assets and could, in the future, contribute 25 per cent or more of its net profits.
The company reported receiving inquiries for the delivery of building materials, machinery, and equipment from a general trading and project management organisation as well as an engineering solutions provider.
AHB, which in May announced that Tunku Kamariah Aminah Maimunah Iskandariah Sultan Iskandar, the eldest sister of the Sultan of Johor, Sultan Ibrahim Almarhum Sultan Iskandar, had joined the board as its non-executive chairman, said that it would keep looking for more orders for its new venture.