KUALA LUMPUR (Aug 29): UMW Holdings Bhd today entered into a Letter of Intent (LoI) with Komatsu Ltd, to establish a joint venture company (JVco) for the heavy equipment business in UMW Holdings.

Komatsu is a long-established Japanese multinational corporation that manufactures construction and mining equipment, utilities, forestry and industrial machinery, has long standing business relationship with UMW Holdings spanning more than 50 years.

In a filing with Bursa Malaysia today, UMW Holdings said that its wholly-owned subsidiary, UMW Corp Sdn Bhd intends to hold 74% of the issued and paid up share capital of the JVCo, while the remaining 26% goes to Komatsu.

UMW Holdings said in its bourse filing that the JVCo could boost sales by capturing new growth segments with the introduction of new Komatsu products, mainly in Malaysia, Singapore, Myanmar and Papua New Guinea.

MWC and Komatsu envisage ample growth opportunities in the construction sector, underpinned by implementation of infrastructure projects and further supported by sales to the natural resources sector such as mining and forestry.

“The market for the heavy equipment is poised for growth in sectors such as construction, mining and forestry. Komatsu’s highly-reliable and wide range of equipment will allow us to penetrate new markets and generate growth potential,” UMW Holdings’ president-cum-group chief executive officer Badrul Feisal Abdul Rahim said in a separate note.

The non-legally binding LoI is not expected to have material effects on UMWH for the financial year ending December 31, 2017.