KUALA LUMPUR: Propel Global Bhd had proposed to diversify its core operations to include property development, entering a new sector as it seeks to rebuild profitability following two consecutive years of steep net losses.
The group, which currently operates across oil and gas, technical services, and information and communications technology, aims to establish a fresh income stream through its maiden commercial property development project in Pahang.
The proposed diversification is expected to provide Propel Global with an additional source of revenue and earnings, thereby reducing its reliance on its existing business segments.
"The property development business is also complementary to the group's existing technical services segment, allowing the group to leverage its experience in engineering, construction and project management in undertaking property development projects.
"In addition, the proposed diversification would enable the group to participate in the development and sale of properties, thereby broadening the group's business activities and providing opportunities for long term growth," said Propel Global in an exchange filing.
After generating a net profit of RM7.62 million on RM110.89 million in revenue for the financial year ended June 30, 2023 (FY23), and a net profit of RM5.71 million on RM176.04 million in revenue for FY24, the group's financial trajectory reversed sharply.
For FY25, revenue contracted to RM111.5 million, resulting in a net loss of RM24.2 million. Top-line contractions persisted into FY26, with unaudited revenue dropping to RM80.38 million and net losses widening further to RM27.21 million.
Management attributed the downturn across its existing divisions to a combination of factors.
The oil and gas segment experienced lower progress billings from several major engineering, procurement, construction, and commissioning contracts, alongside lower radial cutting torch services and the absence of production chemicals income following a subsidiary disposal.
Meanwhile, revenue from technical services fell sharply due to slower project execution, lower progress recognition, and the completion of key contracts from prior cycles, while newly secured contracts remained in early execution phases.
The ICT division similarly saw earnings moderate following reduced billings for one-off maintenance and repair services.
To spearhead its real estate strategy, its subsidiary Propel Global Development Sdn Bhd had acquired two adjoining freehold land parcels in Kuantan for RM14.7 million cash from Goldhill Deluxe Sdn Bhd in October 2023.
The site is being developed into a commercial project known as Riverpoint, which will feature 31 units of three-storey freehold shop lots designed for retail, food and beverage, and office use.
Propel Global projects the development to yield a gross development value of RM64.0 million against estimated gross development costs of RM53.0 million, translating to an expected gross development profit of RM11.0 million.
Planning permission for Riverpoint was secured in November 2024, followed by building plan approval in July 2025.
The project is slated for launch in December 2026, with completion targeted for January 2028 under an estimated 13-month timeline. Funding will be sourced through a combination of internal funds and bank borrowings.
Following the Riverpoint project, the group intends to evaluate and pursue suitable property development opportunities from time to time, subject to prevailing market conditions and the availability of suitable development lands.
The group's entry into real estate is led by Chia Hiap Wei, General Manager of Propel Global Development. Chia joined the group in 2023 bringing over two decades of real estate and project management experience across Malaysia and Australia.
His career includes managing residential and commercial developments at TA Properties and TA Global Bhd, such as Idaman Residence, Damansara Avenue, and Nova Square, as well as hotel refurbishments in Sydney and Melaka.
He subsequently served as deputy senior project manager at UEM Sunrise Bhd, leading land acquisitions in Cheras, Mont Kiara, and Equine Park, alongside managing commercial developments in Kuala Lumpur and Johor.
Under Bursa Malaysia's Main Market Listing Requirements, any transaction expected to divert 25 percent or more of a listed company's net assets to a new line of business, or contribute 25 percent or more to net profits, requires prior shareholder approval.
Consequently, Propel Global will convene an extraordinary general meeting to seek shareholder authorization for the diversification proposal.
In its disclosure, the group highlighted several risk factors, including its lack of an established track record in property development compared to major industry incumbents with larger land banks.
Other operational risks encompass potential project delays, regulatory clearance timelines, raw material and labor cost fluctuations, and heightened leverage associated with capital-intensive development work.
The proposed diversification does not involve any issuance of new ordinary shares, meaning it will have no immediate impact on Propel Global's issued share capital, substantial shareholders' stakes, net asset per share, or earnings per share.
Barring unforeseen delays, the diversification will take effect immediately upon receiving shareholder approval at the upcoming extraordinary general meeting.
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