KUALA LUMPUR (Feb 9): CWorks Systems Bhd plans to diversify into metal products manufacturing from its core business in management software maintenance.

 In a filing to the Bursa Malaysia today, CWorks (fundamental: 1.8; valuation: 0.3) said it entered into a Heads of Agreement (HOA) with Datin Anita A/P Datuk Krishna Murthi and Koormavalavan Laxmanan for the proposed acquisition of 2.5 million shares or 100% in TNM MFG Sdn Bhd.
 
“Subject to the successful implementation of the proposed acquisition, the company proposes to diversify its business to include manufacturing activities, including but not limited to manufacturing of metal articles from its existing management software maintenance business.

“The board of (CWorks) reasonably expects that, barring unforeseen circumstances, TNM's business in the manufacturing industry may in the future contribute 25% or more of the net profits of the group. In this regard, the board proposes to seek shareholders’ approval for the proposed diversification,” CWorks said.

The buyer and sellers will sign a definitive agreement within 45 business days from the date of the HOA, according to CWorks.

CWorks proposes to finance the the acquisition of TNM via the issuance new CWorks shares at 24 sen each to the sellers.

Trading of CWorks shares was suspended between 9am and 10am today in conjunction with the HOA announcement.

When trading resumed, CWorks shares increased one sen or 3.2%  to 32 sen at 11:13am with 382,500 units changing hands. At 32 sen, CWorks has a market capitalisation of about RM38 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)