KUALA LUMPUR (April 2): Construction firm Nestcon Bhd has proposed to diversify its existing business operations to include renewable energy (RE), aiming to bolster future earnings and expand the group's income stream.

In a bourse filing on Tuesday, Nestcon disclosed plans to diversify operations, including engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) systems, project management of RE activities, and ownership and operation of solar PV assets.

With Malaysia's growing population, economic development, and urbanisation, the group noted that the RE business is positioned to benefit from the increasing demand for renewable energy.

The group foresees the RE business potentially contributing 25% or more to the group's net profits and/or diverting 25% or more of the group's net assets in the future. This expectation is driven by ongoing efforts to identify and secure additional projects, fostering further expansion of the RE business in the long term.

Shareholders will vote on the group’s proposed diversification at an extraordinary general meeting (EGM) to be called at a later date. M&A Securities has been appointed as its financial adviser for the proposed diversification.

Presently, Nestcon is principally involved in the provision of construction works, focusing on building construction as well as civil engineering and infrastructure works.

For the financial year ended Dec 31, 2023 (FY2023), the group posted a net profit of RM3.49 million, compared to a net loss of RM15.34 million in the previous year. The turnaround was mainly attributable to increased construction activities and the commencement of new contracts for both the building division and civil engineering and infrastructure divisions.

Its annual revenue expanded 68% to RM775.15 million in FY2023 from RM461.52 million in FY2022.

Shares in Nestcon settled half a sen or 1.41% higher at 36 sen on Tuesday, valuing the group at RM254.93 million.