PETALING JAYA: Malaysian Bulk Carriers Bhd (MBC) has entered into a conditional collaboration agreement with Tunas Manja Sdn Bhd (TMSB) to undertake grocery retail and related businesses, in a move to diversify its revenue streams.
TMSB is principally involved in the management of supermarket chain stores, including general trading of daily necessities and food products to consumers. It operates a chain of 85 supermarkets and grocery stores under the “TMG” brand throughout Malaysia, with the majority of the stores located in the east coast of Peninsular Malaysia.
MBC is principally involved in the ownership and operating of vessels as well as ship management. Currently, the core income stream of the group is derived from the provision of freight services for charters. The group has been looking for new strategic business opportunities to diversify its revenue streams to mitigate the risk of overdependence on its existing core businesses which is subject to fluctuations in ship charter rates which are beyond the group’s control.
“Following a strategic review of the group’s future direction, MBC intends to diversify its existing business to include the grocery business in view of, among others, the favourable outlook of the grocery retail industry as well as the internal feasibility studies conducted by the company. In addition, the proposed collaboration enables the group to leverage on the capabilities of TMSB and its large network of suppliers to better take advantage of the opportunities available in the grocery retail industry,“ MBC said in stock exchange filing.
The grocery business is anticipated to contribute 25% or more of the net assets and/or net profits of the group. The board will be seeking the approval from the shareholders for the proposed diversification at an EGM to be convened.
Based on internal feasibility studies conducted by the company, the group intends to invest RM54.38 million to open an initial 15 TMG Mart-branded supermarkets and 15 TMG Express-branded convenience stores in Kuala Lumpur and Putrajaya, Selangor, Negri Sembilan and Malacca within the next 12 months. These outlets are expected to contribute positively to the financial performance of the group.
The proposals are expected to be effected by the third quarter of 2022. The proposed collaboration is deemed to be a related party transaction in view of the interests of the directors and major shareholders of the company and persons connected with them.
