On 8th Oct 2014, Latitude Tree has entered into Sales & Purchase Agreement with subsidiaries of another listed company KPS Consortium, to acquire a 4.4-acre freehold industrial land, together with its office, factory and machinery for total cash of RM22mil.
The factory in Klang, which is near to Latitude's HQ in Kapar, was used for manufacturing of printed laminated wood by KPS Consortium. KPS has moved its manufacturing activity to a new place.
Latitude does not buy the company or its business. It has to start from scratch and hire management personnel and workers to run the manufacturing process.
It is clear that Latitude wants to grow into upstream activity of furniture manufacturing by enhancing its furniture products using the decorative wood panels manufactured from this newly acquired factory.
I don't think Latitude will sell the products to others in the early stage so it will not contribute much to the revenue. It will not be a surprise to see operational loss in this operation next year.
Though expenses will increase, overall this should be positive for Latitude in the long run as it can design and manufacture its own laminated wood panel, compared to outsource from other suppliers.
For me, the management is working to grow the company and enhance the value for shareholders.
SS661M
It will not be a surprise to see operational loss in this operation next year.
Personally I dun think there will be operational loss. There will be increase in investing activity that consumes cash flow from operation.
2014-10-10 16:23