Flonic Hi-Tec pins hope on project management, interior fit-out biz

PETALING JAYA: Loss-making Flonic Hi-Tec Bhd expects its financial performance to improve in the medium-term, driven by the project management and interior fit-out business following the acquisition of a 51% stake in Jiwa Holdings Sdn Bhd late last year.

Speaking to reporters after the company's AGM last Friday, executive chairman Datuk Chua Wye Man said he can't predict it will take how long for the company to turnaround, except to say that he is hopeful of an improvement in the medium-term.

Describing the precision cleaning system as a legacy business, he said this segment is currently running at "low activity" after the departure of the previous management team who has the expertise in this area.

"It's a legacy business that has been de-emphasised, we still have that subsidiary, just that we don't do so much," he explained.

For now, Chua said the core business will be the project management and interior fit-out segment, with the focus on the commercial space, including office building, hotel and retail.

Jiwa Holdings, which started with furniture manufacturing business, has since diversified into project management and interior fit-out segment.

Flonic paid RM6.38 million for the 51% stake in Jiwa Holdings, whereby part of the acquisition sum came from a rights issue that raised up to RM36.74 million.

However, Chua admitted the company is facing challenges in the current business environment, in particular a slowdown in the property development.

"The market is not easy on the interior space, some projects we're looking to get involved with got delayed," he said.
Despite that, Chua believes there will still be property developments in strategic locations and prime areas.

He also pointed out that building material trading is another business that set to be performing well.

Ask about strategy to turn around the company, Chua declined to tell, except to say that "the board is working out on various measures".

For the financial year ended January 31, 2015, Flonic reported a widened net loss of RM6.73 million compared with RM5.91 million a year before.

Meanwhile, it only posted a net loss of RM1,000 for the first quarter ended April 30, 2015, versus RM619,000 in the previous corresponding period.

"It has been challenging (for these) couple of years, some of that (the losses) were due to legacy business (precision cleaning system), the management who managing that business left the company," Chua said.

Flonic's share price was unchanged at 0.5 sen last Friday on 7,000 shares done.