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KUALA LUMPUR (March 20): Property developer Rivertree STF Synergies Bhd (KL:RSSB) plans to diversify into the management of centralised labour quarters to reduce overall earnings volatility, it said in a bourse filing on Thursday.
The proposed diversification comes after the group entered into a heads of agreement (HOA) on March 3 with Asetra Sdn Bhd — a company wholly-owned, managed and controlled by the fund manager, Catenary Capital Sdn Bhd, Q Centre (Teratai) Sdn Bhd and Q Centre Management Sdn Bhd — to collaborate in the design, planning, building, construction and operation of up to four centralised labour quarters (CLQ) with a capacity of 28,800 beds in the Klang Valley, with a total indicative value of RM600 million.
Rivertree's wholly-owned subsidiary, RSSB Builders Sdn Bhd, will act as the turnkey developer. Rivertree said in its filing that its plans to start managing and operating CLQs without owning them — an asset-light model — will give the company more stable income from rent and service fees.
This will complement the unpredictability of its property development business, a main revenue contributor, which is dependent on market demand, property prices and government policies among others.
The property development segment has been Rivertree’s largest revenue contributor since the financial year ended Dec 31, 2023 (FY2023), after the company disposed of its poultry business, SM Broilers Sdn Bhd, to a director-related company to focus on property development in FY2022.
“This revenue model is anticipated to complement the group's existing property development income and reduce overall earnings volatility, thereby mitigating the risks associated with property development and enhancing long-term financial sustainability,” it said.
The CLQ management business will be spearheaded by Datuk Leong Sai Mun and Datuk Yan Lee Chin. Leong is the founder of Rivertree Group while Yan is the co-founder of Q Centre Group, an operator of CLQs and purpose-built workers’ accommodation.
The group intends to fund additional commitments from the proposed diversification through a mix of internal funds and bank borrowings.
The board will seek shareholders' approval for the proposed diversification at an extraordinary general meeting to be convened.
For the six-month period ended Dec 31, 2025, the company reported a net profit of RM678,000 against RM19.52 million revenue. The company changed its financial year-end to June in 2025.
Rivertree closed 2.94% lower at 33 sen per share on Thursday, valuing the company at RM172.4 million.
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