KUALA LUMPUR (Sept 19): Poh Huat Resources Holdings Bhd is buying a detached warehouse cum office-showroom in South Dandenong, Victoria, Australia for A$4.25 million (RM13.27 million) cash, to expand its business to Australia.

"We have operational bases in Malaysia, Vietnam and South Africa. As part of our expansion plan, we intend to expand [our] operational bases to other countries," it said in a filing with Bursa Malaysia today.

"The demographics and traditions of the Australians are similar to their Western counterparts in North America and the United Kingdom, where our products are well accepted," it added.

Although it noted the population of Australia is relatively smaller compared to its traditional markets, Poh Huat said the affluent major cities' residents in Australia provide good opportunities for it to expand its presence in the relatively untapped market.

The furniture maker said it inked a contract with Australia-based JSNJ Investment Pty Ltd last Wednesday (Sept 14), for the acquisition of the property, which is currently vacant and located in Estate One in East Dandenong, one of the key industrial estates in the South Dandenong Industrial Area Extension.

It comprises a 2,807 sq meter (sqm) single-storey clear span warehouse with a 315 sqm office with retail/showroom facilities at the front of the property.

"The acquisition is the first step for us to establish an operational base in Australia. In conjunction with the acquisition, we will incorporate an Australian subsidiary to hold the subject property and to establish furniture sale and distribution business in Australia.

"With this facility, the group can efficiently consolidate the export and storage of wider ranges of office and home furniture in smaller quantity to suit the market demand of Australia," it added.

While the acquisition is not expected to have material contribution to its earnings, Poh Huat is of the opinion the acquisition and commencement of its business in Australia will contribute positively to its future earnings.

"Barring unforeseen circumstances, the acquisition is expected to be completed by December 2016," it said.

Shares in Poh Huat closed down one sen or 0.64% at RM1.55, for a market value of RM330.89 million.