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China Kunda proposes diversifying into furniture manufacturing and consulting
CHINA Kunda Technology Holdings has proposed diversifying into manufacturing and distribution of furniture as well as consultancy services.
It will initially focus on expanding its furniture business in China and intends to incorporate a new subsidiary.
Currently, it said that its business model rests entirely on its main business, the manufacture and sale of in-mould decoration and other plastic components, which "remains challenging". The group had previously closed its production facility of automobile component parts in Beijing.
It also believes that the furniture manufacturing business will complement its main business, and enhance shareholder value by providing additional and recurring revenue streams.
"A healthy demand in PRC is expected with the increased user penetration from rural urbanisation, catalysed by the prevalence of digital commerce. Accordingly, the Group is optimistic about the demand of furniture related products, in particular in the PRC," it added. "The
proposed diversification would allow the group to participate in the growth prospects of the furniture industry."
As this is substantially different from the existing business and could change the existing risk profile, the company will hold an extraordinary general meeting to obtain shareholders' approval.
China Kunda shares last closed on June 18 at S$0.014.