KUALA LUMPUR (June 19): Loss-making Green Ocean Corp Bhd has proposed to diversify its business to include the distribution and trading of food and beverage (F&B) as well as foodservice.

The proposed diversification, which needs shareholders’ approval at a general meeting to be convened, will contribute more than 25% of the group’s net profit, based on the latest audited loss after tax of RM20.84 million and audited net assets of RM117.65 million as at June 30, 2022.

“The growth in the F&B industry in Malaysia, including the demand for frozen processed food, alcoholic beverages and foodservice, is expected to continue to be driven by the increasing disposable income and affluence, rising urbanisation, growing population, diverse cuisines as well as revival and future growth of the tourism industry in Malaysia.

“As such, the F&B business is expected to contribute positively to the group’s earnings potential over time and at the same time diversify the group’s existing businesses,” Green Ocean said in a filing on Monday (June 19).

The F&B segment will also reduce its reliance on the glove and palm oil business.

For the nine-month ended March 31, 2023 (9MFY2023), Green Ocean narrowed its net loss to RM4.56 million from a net loss of RM16.63 million a year earlier. Higher net loss in 9MFY2022 was due to the disposal of quoted shares.

9MFY2023 revenue decreased to RM2.65 million from RM7.61 million, impacted by its glove and palm oil business.

Its wholly-owned unit Ace Distributions Sdn Bhd (ADSB) ventured into the F&B business in January last year. In line with the group's plan to expand its F&B business, ADSB changed its name to Ace Pacific Sdn Bhd (APSB) in May this year, to be involved in the trading, retail, distribution, import and export in all kinds of F&B.

APSB inked an original equipment manufacturer (OEM) distributorship agreement on May 19 to sell frozen processed food products under all the brands carried by Perusahaan Saudee Sdn Bhd, which is a wholly-owned unit of Saudee Group Bhd.

Green Ocean and Saudee share the same largest shareholder - Focus Dynamics Centre Sdn Bhd, a wholly-owned subsidiary of Focus Dynamics Group Bhd. Focus Dynamics Centre owns 29.74% of Green Ocean while it owns 20.78% of Saudee. The largest shareholder of Focus Dynamics is Fintec Global Bhd with 30.63% through its subsidiary Asiabio Capital Sdn Bhd.

The largest shareholder of Fintec is an investment fund based in Hong Kong. Fintec listed Adamas Finance Asia Ltd as its substantial shareholder in its 2022 annual report, with 0.53% stake.

Earlier this month, APSB also secured its first customer for frozen processed food through an OEM supply agreement with Swang Chai Chuan Sdn Bhd, SCC Marketing (M) Sdn Bhd and Chop Chin Huat Sdn Bhd.

Green Ocean also plans to set up a non-halal F&B segment by venturing into the trading, import and distribution of alcoholic beverages. It has obtained two licences from Majlis Bandaraya Petaling Jaya (MBPJ) to permit office management activities and storage of hard liquor.

Shares of Green Ocean closed up half a sen at two sen on Monday, giving it a market value of RM31.67 million.