KUALA LUMPUR (Aug 17): Straits Energy Resources Bhd (KL:STRAITS) has proposed to diversify into engineering, procurement, construction and commissioning (EPCC) services, saying the move would allow it to pursue higher-value contracts in areas such as renewable energy, data centres and smart city infrastructure.

The diversification is expected to result in the EPCC business contributing 25% or more of the group’s net profit, or diverting 25% or more of its net assets to an operation that differs widely from its existing businesses, said Straits Energy in a bourse filing on Monday.

The EPCC business, it said, will be undertaken through its existing subsidiary Straits CommNet Solutions Sdn Bhd (SCS), whose principal activities currently include the provision of telecommunications and network services, information technology services and construction work.

SCS is a CIDB-certified Grade G7 contractor, which allows it to undertake civil engineering and building construction projects without a limit on project value. Straits Energy said the certification, together with its Malaysia Digital status, would position the group to undertake high-value, end-to-end turnkey projects in areas such as renewable energy, data centres and smart cities.

The group intends to tender for high-value infrastructure projects, including smart city and modern urban infrastructure developments, as well as renewable energy facilities such as solar photovoltaic farms and related power infrastructure.

Straits Energy said it would leverage its existing technical expertise, project management capabilities and vendor network to expand its EPCC operations into sectors including oil and gas, smart city and public infrastructure, high-tech industrial and data centres, renewable energy and utilities, healthcare and education.

The proposed diversification builds on the group’s expansion into telecommunications and network services, which was approved by shareholders in March 2023.

Since then, revenue from the segment rose 93.12%, or RM97.96 million, to RM105.19 million for the 18-month financial period ended June 30, 2025. The segment also swung to a profit before tax of RM2.49 million from a loss before tax of RM1.50 million for the financial year ended Dec 31, 2023.

The group has since expanded its capabilities and undertaken EPCC services for the telecommunications sector on an integrated, turnkey basis, including in-building solutions, electrical systems and laboratory installation and commissioning, as well as civil, structural and installation works.

The telecommunications and network services segment was the second-largest revenue contributor, accounting for about 2.3% of group revenue during the period. The remainder came from inland transportation services, port and facility management services and ship-to-ship (STS) operations.

Separately, Straits Energy is seeking shareholders’ approval for a 12-month mandate to dispose of its entire 7.37 million-share stake in Nasdaq-listed CBL International Ltd (CBLIL), representing a 26.8% equity interest, which is expected to result in a pro forma loss of RM9.16 million.

The shares may be sold through the open market of Nasdaq in one or more tranches, depending on prevailing market conditions.

The group said proceeds could range from RM10.24 million under the minimum scenario based on a selling price of US$0.34 per share, to RM28.6 million under the maximum scenario based on a price of US$0.95 per share.

CBLIL was incorporated in the Cayman Islands in 2022 as a private limited company and was subsequently listed on Nasdaq in 2023. It is principally involved in providing oil bunkering services.

The disposal could raise up to RM28.6 million, with Straits Energy saying the exercise would allow it to progressively exit and monetise its investment in CBLIL following an appreciation in the value of the shares over the past two months.

Of the proceeds, RM27.15 million has been earmarked for working capital requirements, including the purchase of oil cargo, salaries and staff-related expenses, as well as administrative and operating expenses. The remaining RM1.45 million is allocated for expenses related to the proposal.

Shares of Straits Energy closed unchanged at 2.5 sen on Monday, giving the group a market capitalisation of RM22.79 million.