KUALA LUMPUR (July 13): Apparel manufacturer PCCS Group Bhd (KL:PCCS) is planning a demerger of its credit financing and related insurance business, splitting the fast-growing unit — which currently contributes 27% to the group's net profit — and distributing its shares to shareholders.

Under the plan, PCCS will undertake an internal reorganisation to place its used-vehicle financing arm, Southern Auto Capital Sdn Bhd (SAC), under its Southern Capital Group Sdn Bhd (SCG). PCCS will then distribute 100% of SCG shares to PCCS' shareholders on the basis of one SCG share for every seven PCCS shares held.

The share distribution will be executed via a RM33.74 million capital reduction, which will not require any cash outlay or the cancellation of existing PCCS shares, according to a bourse filing from PCCS.

To facilitate the exercise, SCG will first be converted into a public limited company, PCCS said, but did not elaborate.

PCCS is also seeking a ratification of the diversion of its existing business to include credit financing and related insurance business, a move that became necessary after income from the division breached Bursa Malaysia's 25% profit contribution threshold for non-core businesses.

SAC's net profit surged to RM3.85 million in the financial year ended March 31, 2026 (FY2026), accounting for 27% of the group's total net profit. For FY2026, PCCS' net profit jumped to RM14.25 million from RM5.72 million in FY2025, while revenue grew to RM560.17 million from RM547.77 million.

PCCS' largest shareholder is CCS Capital Sdn Bhd with a 41.44% stake, followed by Federlite Holdings Sdn Bhd (7.26%) and the group's non-independent, non-executive director Chan Chow Tek (5.23%). CCS Capital is the private investment vehicle of PCCS' founding Chan family.

As at market close on Monday, PCCS shares were unchanged at 29.5 sen, valuing the company at RM65.8 million.