Serial System is looking to the king of fruit for its next growth breakthrough.
The largest electronics component distributor listed on the Singapore Exchange is entering into a joint venture to invest in a Malaysian durian company.
Serial System executive chairman and chief executive officer Derek Goh told The Straits Times he expects higher profit margins in the durian business than in electronics, and wants to be a first-mover in the China market.
Durians have been popular among devotees in countries such as Singapore, Malaysia and Thailand for some time now, but have only recently acquired a following in China - a vast potential market.
The group said last month that its wholly owned unit Serial System International and Mr Goh have entered into a joint venture agreement with a Mr Philip Ting Ding Ing to set up an investment holding firm called Bast Investment.
Bast Investment will pay RM10 million (S$3.2 million) for a 50 per cent stake in Musang Durian, which manufactures durian puree and durian-related products.
"We still intend to focus on and expand our core semiconductor business. But the profit margins there are quite low," said Mr Goh.
"Durians look like they will be the next trend and profit margins are also much higher," he said.
Mr Goh, 55, is no stranger to the food industry. He learnt how to make dim sum at the age of 11 when he started helping out at his father's hawker stall.
"The food business is lucrative but can be very time-consuming and capital-intensive," Mr Goh said, adding that he hoped his business experience as well as the company's existing connections and network will stand the venture in good stead.
The company is looking to take durians and related products into the China market.
"For now there aren't many people in this business in China, so there are still opportunities to build up our brand. We want to be the first-mover," Mr Goh said."China will be the biggest market but we don't want to put all our eggs in one basket - we eventually hope to go into other markets like Taiwan and Hong Kong."
Serial System's latest move to diversify came as it logged revenue of US$706.9 million (S$959 million) for the six months ended June 30, compared with the US$711.4 million generated a year earlier. Net profit was US$6.1 million, reversing from a net loss of US$3.3 million for the same period last year.
The company has said it expects to remain profitable in the 2017 financial year despite keen competition, as global semiconductor sales are surging.
In June, Serial System announced plans to spin off its Hong Kong electronic components entity - 91 per cent-owned Serial Microelectronics (HK) - through a listing on the mainboard of the Hong Kong stock exchange.
Mr Goh said he will be "exploring many other businesses" over the next three to seven years, and also intends to take advantage of upcoming slumps in the market to acquire more companies.