I have been monitoring the progress of Konsortium Transnasional Bhd (KTB) since it turned to construction for a new lease of life. Despite being a Practice Note 17 (PN17) status company since April 2020, the company has taken a bold move by diversifying into the construction industry, specifically targeting affordable housing and industrial construction projects in the range of RM50 million to RM100 million.

Although KTB has few financing options currently due to its PN17 status, the company is projected to turn profitable next year after the long loss-making express bus business is disposed of. Once the regularisation plan is approved by Bursa, KTB will have more funding options to take on larger construction jobs.

KTB's CEO, Clement Valentine Toh Shu Yen, shared that the company's intention is to focus on landed residential projects in the affordable housing sector, where it can offer developers a better costing alternative by being directly involved in the infrastructural, layout, and other design elements to reduce construction duration and cost. This approach, coupled with the growth of online businesses during the pandemic, has put KTB in a good position to tap the industrial segment, especially warehousing.

KTB's current order book comprises RM485.38 million worth of housing projects and a shoplot job secured since October 2021, with the potential for more jobs to emerge in Pahang as the Central Spine Road becomes more accessible. Toh is confident that KTB's construction arm can contribute 80% to the group's revenue post-regularisation, with the remainder coming from stage bus operations.

KTB's regularisation plan includes a private placement of 125 million new shares, representing 26.61% of its existing shares, at an issue price of 16 sen per share, raising gross proceeds of RM20 million to be used for working capital of the construction business. While dilution of shares is inevitable, Toh believes that shareholders should consider what the RM20 million will create for the group and notes that KTB will undoubtedly be profitable next year once the express bus business is disposed of.

Key points for investors to focus on:

1. Konsortium Transnasional Bhd (KTB) is a loss-making bus operator that is looking to strengthen its affordable housing jobs and clinch industrial construction projects in the RM50 million to RM100 million range to turn profitable next year.

2. KTB's Practice Note 17 (PN17) status since April 2020 has limited its funding options, which narrows down the size of construction jobs it can take on in the near term.

3. KTB's regularisation plan includes disposing of its express bus business and focusing on landed residential projects and the industrial segment.

4. KTB's current order book comprises RM485.38 million worth of housing projects and a shoplot job secured since October 2021, and its biggest development is worth RM139.88 million.

5. KTB's regularisation plan includes a private placement of 125 million new shares to independent third parties at an issue price of 16 sen per share to raise gross proceeds of RM20 million for working capital of its construction business.

6. KTB's shares have risen sixfold to hover at the 18 sen level from a record low of three sen when the pandemic hit in March 2020, and the company is currently valued at RM86.91 million.

Diversifying into Construction to Address PN17 Status

In the case of Konsortium Transnasional Bhd (KTB), the company is currently experiencing financial difficulties and is categorized as a Practice Note 17 (PN17) status company, which means that it has few financing options and material uncertainty in its ability to continue as a going concern. As a result, KTB is focused on turning profitable next year once its long loss-making express bus business is hived off and is looking to strengthen its construction business.

KTB is diversifying into construction, specifically focusing on landed residential projects and industrial construction projects in the RM50 million to RM100 million range. KTB intends to get directly involved with the infrastructural, layout, and other elements of design to reduce the duration and cost of construction for its clients, which it hopes will result in better margins for the developer.

KTB's regularisation plan includes disposing of its wholly-owned Park May Bhd to Nadicorp Holdings Sdn Bhd for a nominal sum of RM1 and waiving a sum of RM51.46 million owed by KTB and its unit Citiliner Sdn Bhd to Nadicorp and Park May. KTB's regularisation plan also includes a private placement of 125 million new shares to independent third parties at an issue price of 16 sen per share to raise gross proceeds of RM20 million, which will be used for working capital of the group’s construction business.

In conclusion, KTB's diversification into construction has opened up new opportunities for the company to turn around its fortunes, and the company's focus on affordable housing and industrial construction is a smart move, given the current market conditions. The company's long-term prospects look promising, and investors should keep a close eye on KTB's regularisation plan as it moves forward.

It is my hope that the information provided in this article will be useful for all investors. My intention is simply to share information about a company that has the potential to bring profit to investors. Ultimately, any decision made is up to the individual.

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