Salutica plans property, construction venture; placement may raise RM16.18m

Electronics maker Salutica Bhd has proposed diversifying into property development and construction, backed by up to RM16.18 million in gross proceeds from a private placement. The group earmarks RM8 million for the new segment as it seeks to reduce reliance on loss-making manufacturing.

PETALING JAYA (Oct 8): Electronics manufacturer Salutica Bhd has proposed diversifying into property and construction, with RM8 million earmarked for the new business from a private placement that could raise gross proceeds of up to RM16.18 million at an illustrative issue price of 11.5 sen per share.

In a Bursa Malaysia filing on Wednesday (Oct 7), the group said the proposed diversification would encompass property development, construction and related activities, including design-and-build works and the trading and supply of construction materials, as well as property management and investment.

Salutica said the move was intended to broaden its revenue and earnings base and reduce its reliance on manufacturing, which accounted for all its revenue and had been loss-making over the financial years and periods reviewed in the announcement. It intends to continue its manufacturing business alongside the proposed new segment.

The group plans to begin with smaller construction and property-related projects before progressively undertaking larger projects as it builds experience and capabilities. It may also explore joint ventures, partnerships or collaborations with landowners, developers, contractors and other strategic partners. As at Sept 15, 2026, Salutica had not secured or entered into any construction, property development or property investment projects.

The group intends to incorporate a new subsidiary by the end of Oct 2026 to undertake the business. Subject to shareholders’ approval for the diversification, it plans to apply for Grade G7 contractor registration with the Construction Industry Development Board. The RM8 million allocation would partly or fully finance working capital and capital expenditure for the proposed business, with potential uses including project mobilisation, construction materials and equipment, subcontractor payments, professional fees, land or property acquisitions, and joint-venture or collaboration deposits.

Executive director Chuah Chong San will lead the new business. According to the filing, his property development experience includes serving as a director of PD Ara Sdn Bhd, the developer of Myara Park, and Luster Ara Sdn Bhd, the developer of Amara Residences, both in Ara Damansara, Petaling Jaya.

For the proposed placement, Salutica intends to issue new shares representing up to 30% of its issued shares, excluding treasury shares, to third-party investors to be identified. Based on its share base as at Sept 15, a full placement would involve 139.755 million new shares if none of its three million treasury shares are resold before implementation, or 140.655 million new shares if all are resold. These are illustrative scenarios, with the actual number of placement shares to be determined later.

At the illustrative issue price of 11.5 sen per share, the two scenarios would raise gross proceeds of approximately RM16.07 million and RM16.18 million respectively. The final issue price will be fixed later, at a discount of no more than 20 per cent to the five-day volume-weighted average market price immediately preceding the price-fixing date.

Besides the RM8 million earmarked for property and construction, approximately RM7.9 million to RM8 million would support manufacturing expansion and working capital, while RM171,000 would cover estimated placement expenses. The property and construction allocation is intended to be used within 24 months of receipt of the funds. If suitable projects cannot be identified or secured within that period, or an extended timeframe if applicable, the allocation would be redirected to working capital for existing manufacturing projects.

If shareholders do not approve the diversification, the allocation would instead be used wholly for the general working capital requirements of the group’s existing businesses. Salutica said it would make the necessary announcements and/or seek shareholders’ approval in accordance with listing requirements if there is a material variation in the use of proceeds.

The group recorded an unaudited net loss attributable to shareholders of RM23.75 million on revenue of RM27.94 million for the 12-month financial period ended June 30, 2026. Both proposals require shareholders’ approval at an extraordinary general meeting to be convened. The placement also requires Bursa Malaysia Securities Bhd’s approval for the listing and quotation of the new shares, with other relevant approvals to be sought if required. The two proposals are not conditional upon each other.

Subject to the relevant approvals and barring unforeseen circumstances, the placement is expected to be completed by the second quarter of 2027. The diversification would take effect upon shareholders’ approval.