Nagamas International Bhd expects its air freight division to be a major earnings contributor on the back of its proposed tie-ups with airlines in the cargo business.

Nagamas group chief executive officer Datuk Ong Jyh Jong said it was bidding for cargo contracts from two foreign airlines, one of them in China, towards sustaining earnings amid the slowing global economy.

"But I must add that we cannot take too long as our shareholders have expectations," he told reporters after the company's AGM yesterday. Speaking to The Edge Financial Daily later, Ong said he expected to finalise the deals "within a month".

He said the proposed deals would make up for the shortfalls from an existing cargo contract with Air Berlin, the performance of which had yet to achieve its desired results.

Pursuant to an announcement in April this year, its subsidiary Nagamas Enterprise (HK) Ltd was appointed by Leisure Cargo Asia as its cargo general sales agent to market and manage the cargo operations of Air Berlin flights operating at Beijing and Shanghai.

Last November, Nagamas was appointed by ABDA Cargo Services LLC as the sole sub-general sales agent in China, Hong Kong and Macau for the sale of air cargo transport services offered by Leisure Cargo.

Apart from air freight, Nagamas, formerly Tenco Bhd, also produces various industrial products. The group added two new income streams — provisions of aviation and property services in China — following its successful restructuring in September 2007 out of PN17 status.

Ong said it was also hopeful that its property services in China would bear fruit soon.

"Our target is to try to show something in the next financial year. We should be targeting profit. The important thing in this one or two years, we have to stay profitable and not get into trouble," he said.

"The focus is not about the turnover, the focus should be about the bottom line. We should be very prudent. We should not at any cost try to expose the company that would make us lose money," he said.

Although Nagamas was debt-free, Ong said it still had to improve its cash flow.

Nagamas posted a net profit of RM3.88 million for its year ended March 31, 2008 on the back of revenue totalling RM81.7 million. Operational profit rose to RM5.2 million from RM1.8 million.

Ong said Nagamas was looking for investors to spur the development of its 900-acre Malaysia-China Industrial Park Project in Guangdong.

"In the next couple of months, I don't expect to see something major happen, but it will definitely give us a foothold. Certainly, we will bring partners in to look at the place, to explore the opportunity," he said.

Nagamas recently entered into a memorandum of understanding with China's Zhan Jiang Overseas Chinese Administrative Zone to explore the possibility of developing the industrial park.

On the growth of its industrial division, Ong said it would be "pretty flat". He said Nagamas could be very "China-centric" in the coming few years because it saw a huge market potential there despite a shrinking world economy.