Investors hammer NexG over Classita acquisition

Free Malaysia Today

a day ago

BIMB Securities has downgraded NexG to a 'sell' from 'hold' after its acquisition of a minority stake in Classita Holdings Bhd.
PETALING JAYA : NexG Bhd plummeted 31% today after investors gave the thumbs down to its acquisition of a minority stake in Classita Holdings Bhd, an undergarments manufacturer seeking to reinvent itself as a property developer.
Formerly known as Datasonic Group Bhd, the stock tumbled as much as 31.5% or 17 sen to its intraday low of 37 sen. This was its steepest fall in a single day since October 2018.
The counter ended the day half-a-sen higher at 37.5 sen, down 29.9%, valuing the security-based ICT solutions provider at RM1.24 billion.
Bursa Malaysia also suspended short selling of the counter for the day. It was the most actively traded stock on the bourse with 188 million shares changing hands.
NexG announced last Friday it had acquired a 32.61% equity stake and another 414.31 million warrants in Classita for a total of RM76.78 million. If it exercises all the warrants – and no one else does – its stake could rise to 49.6%.
The company bought 402.06 million Classita shares from Hong Seng Consolidated Bhd at 15 sen each – 87.5% above the last traded price of eight sen.
NexG said it will fund the purchase with RM40 million in short-term borrowings, and RM36.78 million in internal funds.
Last month, NexG was granted a six-month contract extension by the home affairs ministry to continue supplying passport documents and polycarbonate biodata pages to the immigration department.
This is the fifth extension granted since the original contract expired in November 2021. NexG said the extension was for the period from Dec 1, 2025, to May 31, 2026.
From lingerie to property
Perak-based Classita, formerly Caely Holdings Bhd, is known for manufacturing lingerie and undergarments but has signalled its intent to diversify into the property and construction sectors.
The company is poised for another name change after it announced today it plans to change its name to NexG Bina Bhd after NexG became its largest shareholder.
It also appointed former inspector-general of police Razarudin Husain as its new independent, non-executive chairman with immediate effect.
NexG said its interest in Classita is mainly for its property and construction business, including a CIDB G7-certified unit and ongoing projects. It also sees Classita's land bank and strong cash position as key advantages.
Meanwhile, BIMB Securities has downgraded the stock to a 'sell' from 'hold'. The research house questioned whether NexG's move is a 'strategic diversification or distraction' from its core technology and identity business.
It noted that 90% of Classita's revenue comes from undergarments manufacturing while its property push has yet to generate meaningful earnings.
'Entering a sector with a different DNA – cyclical, capital-intensive, and operationally complex – makes flawless execution more critical,' it said.
It cautioned that NexG must be 'more proactive and transparent' on integration and capital allocation to assure investors.
Classita's shares rose 12.5% or one sen to nine sen today, valuing the company at RM110.95 million.