Joe Holding swaps batteries for bites

When a public company says it wishes to venture into a new area of business, it often raises eyebrows.

Such companies typically come to market with clear business objectives.

Venturing into a novel area of business indicates that the company may have lost its way and is trying something new.

Take the case of Joe Holding Bhd. The company carved out a solid niche in automotive batteries for Japanese and European vehicles, supplying markets in Malaysia and over 30 countries.

Over the years, an influx of cheaper imports has intensified competition.

In addition, the global shift towards electric vehicles has eroded demand for conventional lead-acid batteries, while rising input costs like lead and plastics have compressed margins.

Joe Holding has slipped into the red since its financial year 2023.

Against this backdrop, the group announced its plans to diversify into the trading and supply of building materials and information technology equipment, particularly for construction projects and data centre developments – a move the group says will allow it “to capitalise on a booming segment with favourable long-term prospects”.

More puzzling, however, is its proposed venture into the food and beverage (F&B) business, with plans to open outlets within its existing properties in Desa Sri Hartamas, Kuala Lumpur, including but not limited to Malaysian fusion cuisine and bistro-style dining.

The properties comprise four floors with a total built-up area of 13,504 sq ft.

By contrast, the F&B sector is one of the most competitive and low-moat industries, especially when compared with its automotive battery operations.

This is not the first time Joe Holding has ventured outside of its core business.

It previously forayed into nitrile gloves during the Covid-19 boom.

The group has since placed the glove business under strategic review, citing persistent oversupply, intense competition from Chinese manufacturers, and weak selling prices.

These moves raise questions about the group’s ability to build sustainable core capabilities and execute a coherent long-term strategy.