NexG’s surprise curve: From secure tech to sheer confusion?

WHAT could a technology firm offering security-based solutions possibly know about lingerie production and property development?

This was surely the question on the minds of investors in NexG Bhd – formerly Datasonic Group Bhd – which announced the acquisition of a 32.61% stake and 414.31 million warrants in Classita Holdings Bhd – formerly Caely Holdings Bhd – on Aug 8.

For now, investors clearly aren’t impressed by the acquisition or the plans to diversify into property development, judging by NexG’s share price plunge this Monday – a dramatic reversal of the rally that began in late June.

Now consolidating after being oversold, NexG’s board of directors and management will need to convince investors why buying into Classita – soon to be renamed NexG Bina – makes sense.

The proposed name change signals the new major shareholder’s intent to ramp up property and infrastructure development – capital-intensive ventures with slower earnings recognition compared to tech.

For comparison, Classita still relies heavily on its lingerie business, with property development contributing only about RM3mil in revenue for the third quarter ended March 31, 2025, compared to RM46.2mil from manufacturing sales.

BIMB Securities has flagged several concerns over NexG’s latest move – and these bear watching.

Will NexG’s board and management be able to execute strategies in the property and civil infrastructure construction space smoothly, given that this is entirely new territory for them?

Deploying capital and managing assets may follow a different cycle from what they are accustomed to, and integration into a bigger group can also be tricky.

Given the intent to go all-in on property and infrastructure development, questions will arise about NexG’s plans for the lingerie business – still the mainstay of Classita.

If a divestment is on the table, timing will be critical, as it may take a while before the property and construction segments start to meaningfully contribute to revenue and profitability.