Chan sees Harvest turnaround in 2012

Harvest Court Industries Bhd is expected to return to the black in its current financial year ending December 2012, with contributions from contracts worth RM808.1 million, said executive director Datuk Raymond Chan Boon Siew.

Shareholders on Tuesday voted in favour of Harvest's proposed diversification from its existing business of timber doors and related products into construction.

In line with the proposed diversification, Harvest will enter into related party transactions (RPT) with Sagajuta (Sabah) Sdn Bhd and 1Green Enviro Sdn Bhd to undertake three construction and development projects. They are 1Sulaman Project which has a contract value of RM129 million, 1Likas Project (RM609.1 million) and 1Green Enviro Project (RM70 million).

These are considered RPT as they were awarded by companies related to one of the directors and major shareholders of Harvest.

"I think [the projects are] really big, a lot of mid-sized listed companies are only doing half a billion [ringgit worth of] order book, we are doing RM800 million," Chan said after the EGM on Tuesday, adding that the order book will last for four years.

Harvest had a market capitalisation of about RM91 million based on its close of 50 sen on Tuesday.

Chan said construction will commence next month on the projects which will start contributing to Harvest's earnings and revenue from July onwards.

In a recent circular, Harvest's independent adviser Covenant Equity Consulting Sdn Bhd had estimated net profits of RM18.1 million, RM38.3 million, RM19.17 million and RM0.8 million for FY12, FY13, FY14 and FY15 respectively, for the company.

For FY11, Harvest posted a net loss of RM227,285 on revenue of RM11.99 million

Moving forward, Chan said Harvest will embark not only on related party transactions, but on new jobs in the private or government sector.

On shareholders' concerns over Harvest's share price, which has fallen about 77% from its all time high of RM2.14 in November 2011, Chan said: "Now [that] the shareholders are very certain of the business, people will have confidence moving forward. So once shareholders gain confidence, the public investors will come in. That is what we are trying to create. All this while we have been subjected to the uncertainties as to whether the diversification exercise will be carried out."

"Now [that the diversification] has been approved, let's hope that the next few weeks, we will be able to bring out the confidence of the investors," he added.

Chan said he feels Harvest's share price is currently undervalued given the size of its projects.

However, he has no plans to cash out of the company. "I'm rolling out the projects, why should I be exiting?" he said, adding that he has not sold a single share in the company, reflecting his commitment.

He said he sees big potential in Harvest and will definitely increase his stake.

Harvest has proposed a private placement and a rights issue with warrants exercise to raise funds.

On plans for Naim Indah Corp Bhd, Metronic Global Bhd and Ariantec Global Bhd, in which he has a substantial stakes, Chan said: "Every listed vehicle that I have invested in, I would definitely be looking at how to create value."

This story appeared in The Edge Financial Daily on May 23, 2012.