ACE Market-listed K-One Technology Bhd’s decision to sell its cloud computing business to Tokyo-listed Itochu Corp is notable.
It is indeed rare for an ACE-Market listed firm, that too one that has struggled to show a profit in recent years, to be able to sell a business to a multinational company for a tidy sum.
And yet, this is what K-One seems to be pulling off.
K-One plans to sell its cloud business arm, G-AsiaPacific Sdn Bhd (Gap), to Itochu for a total of RM94mil. Of that, RM75mil is to be distributed as a special dividend to K-One’s shareholders, which works out to around nine sen a share.
K-One’s beleaguered stock price enjoyed a 20% lift from this news, moving from 12 sen to 14 sen.
The company acquired Gap, which provides cloud computing services from the likes of Google and Amazon Web Services, back in 2019 from its original shareholders.
The good thing is that it only paid RM37.66mil for the business, while the planned sale to Itochu will generate a RM47.6mil gain on disposal, indicating that K-One has added value to Gap since acquiring it.
Indeed, it was only two years ago, when K-One executives boasted about GAP’s growth prospects. So what now?
While Gap has remained profitable, K-One has reported losses in the last three quarters due to challenges facing its core electronics manufacturing services (EMS) business.
Gap was the group’s “largest revenue contributor” in the last few years, contributing about 58.24% to K-One’s revenue in financial year 2025.
K-One says that following the sale of Gap, it will shift its focus and financial resources towards expanding its EMS business into high-value-added industries such as medical and healthcare.
K-One diversified into healthcare in May 2024, and the group says it plans to ramp-up manufacturing activities for its healthcare product portfolio, backed by new customer acquisitions and potential increase in demand resulting from the ongoing reconfiguration of global supply chains, including shifts driven by US-China trade tensions.
It is left to be seen if that plan will pan out.
Whether that strategy will pay off remains to be seen.