Since the introduction of new substantial shareholders, Southern Score Builders Bhd (‘Southern Score’), previously a GN3 company with suspended trading, has significantly transformed. The company is now a fundamentally sound construction turnkey company capable of paying dividends to its shareholders.

*The company declared a 1 sen dividend, with ex-date on 19th April 2024.

To recap, Southern Score acquired Southern Score Sdn. Bhd. (‘SSSB’) for RM252.0 million, compensated via the issuance of 1.68 billion consideration shares. Through SSSB has also committed to a net profit guarantee of RM80.0 million from 2022 to 2024, ensuring the investment is worthwhile.

Southern Score, or SSSB, maintains a close relationship with Platinum Victory (‘PV’), a prominent property development brand in Setapak, recognised for its extensive portfolio of successful residential developments.

Interestingly, SSB8 called for an Extraordinary General Meeting (‘EGM’) on April 22, 2024, to seek approval of shareholders on the proposed variation of funds raised alongside the initial acquisition of SSSB and a Private Placement which raised a total of RM108.6 million.

According to the EGM circular, approximately RM62.6 million has been expansion , leaving RM46.0 million earmarked for future plans.

Key adjustments in the use of proceeds include:-

● The company has retracted plans to inject RM21.8 million into TCS SS Precast Construction Sdn. Bhd. (‘TCSPC’), a 35% owned associate company, due to unexpectedly high building material and labour costs and the lack of demand for Industrialised Building Systems (‘IBS’).

● A shift from purchasing a new office to allocating RM5.0 million for working capital to support ongoing projects like Vista Harmoni Sentul Residences and Berlian Setapak 2 Residences.

● RM15.0 million initially earmarked for the acquisition of storage land will now be redirected to repay contractors, enhancing the company’s working capital.

● Most notably, an allocation of RM21.8 million into acquiring mechanical and electrical (‘M&E’) companies, which would be completed within a short span of 12 months.

According to the circular, the plan for involvement in the M&E construction business is to enhance and complement the current scope and offerings to their end customers.

However, M&E is now in high demand not particularly due to property development, but for other exciting projects running in the southern side of Malaysia.

So, could the strong fundamentals, announcement of dividend and the interesting move into the M & E industry be the true factor behind Southern Score’s significant price rally?