Income producing subsidiaries

A lot of companies are having "incoming producing" subsidiaries to strengthen the durability of their company.  If I'm not mistaken, Dayang purchased Perdana Petroleum due to the "income strength" of the company with its 5 year contracts with Petronas.

A lot of companies have decided to go this route so their business can sustain in bad times as Malaysia has seen its fair share of financial troubles.

It's commendable that companies do this as they are "thinking outside the box" when it comes to diversification of revenues.  But most companies don't take this step far enough.  Quite frequently the defensive income producing business is still related to the industry, example Dayang and Perdana Petroleum or Malaysia smelting co with its tin smelting as the sustainble income vs. the tin mining subsidiary.

Most of these businesses are doing it wrong. it is better that the income producing business be hardly related to the cyclical business.  Boustead is doing it right, construction and insurance.  Both industries have very different business characteristics.

It's this diversification which will likely see the business through thick and thin.