…the startup cost for its biaxially oriented polypropylene (“BOPP”) and cast polypropylene (“CPP”) plants as well as lower product margins due to penetrative pricing.
The new stretch film manufacturing facility in Phoenix, Arizona in the United States is expected to have a commercial rollout by first quarter of calendar year 2018. It forms part of the pivotal and strategic move by the Group to be close to its customers and its sources of raw materials as well as access to other new customers in the region.
With the commissioning of its BOPP and CPP plants as well as the increased capacity of its Ipoh plants, the Group’s strategy is to focus on volume based converter market within Southeast Asia and Asia Pacific regions by developing sales networks with new distributors and wholesalers. The Group is confident that by optimising the production output, the operation costs will be better managed, hence improving its operational margins.
The revenue generation is still insignificant in comparison with the other businesses but the quantum of improvement in revenue (increased by 1,023%) is encouraging. The long period of regulatory approvals in the different countries weigh down revenue growth. The number of treatments is expected to increase sharply upon completion of the required approvals.
The overwhelming response from its newly launched fashion wear –Hijabs during the quarter had added on to the revenue. Wider usage of social media and marketing digital platform efficiently have facilitated the leaders to reach out to younger group of entrepreneurs. Hence, the new members recruitment which increased by more than 40% as compared to preceding year’s corresponding quarter had also contributed higher sales for the division.
The MLM division will continue to collaborate with a well known local designer to roll out more fashion wear and related products, and other trendy lifestyle range of products.
The slowdown in demand was due to lower orders from smart devices as there is no new development in terms of technical specifications in the light emitting diode (LED) flash used in 2016 versus 2017.
“However, we are in a niche market; we design the equipment specifically made for our customers. We are a niche player. Our margin is higher, so we have to work harder in the second half.”
Elsoft is also developing a solution for depth sensing or 3D sensing, an infrared sensing and emitter for the smart devices and automotive segments. It also plans to add value to its automated test equipment (ATE) products by tying up with a mechanical design company.
“We are good at electronics and software but lagging in mechanical design. The ATE segment features two areas, the tester and the machine. Even though we are doing both now, I feel our machine is not good enough. If we can sell a product that is good in every part, then it’s excellent. We want to offer better solution for our customers. We want the ‘okay’ segment to be better.”
“The good thing is that we have been in the [tourism] business for the past 55 years, and we are not a small player in Malaysia when it comes to corporate travels. So we want to [leverage on] our existing customer base. Imagine a client with 3,000 employees — we want to approach their staff to use our services when it comes to leisure travel as well.”
“We are different from other players in the sense that our bundled products have more value as compared to buying them individually. So consumers can get more value when they buy everything together and they only have to deal with Mayflower Online for peace of mind on their whole trip — that is our goal. We are not looking to just be a [pure] marketplace where we have to rely on agents to come in and contribute the products. We offer our own products and we take ownership of them to take care of the customers. We’re not just a platform where we are not sure who the suppliers are or how their services are like.”
The five non-core assets, E&O managing director Kok Tuck Cheong said, are the Straits Quay Mall, properties in Gertak Sanggul, Kemensah Heights, The Peak, and the retail space of its 80%-tenanted St Mary project. According to E&O’s latest annual report, the aforementioned properties’ net book values totalled approximately RM546 million as at March 31, 2017.
“Keeping a mall is not necessarily our core business,” Kok said, giving confirmation of rumours of the group’s plan to dispose of its seven-year-old, loss-making Straits Quay Mall in Penang.
“When you build big hospitals, you end up incurring a lot of structural costs, maintenance costs, utility bills, manpower costs and so on. All that is a cost that has to be transferred somewhere. The question is where does it get transferred to? The patients’ bills,” said Tan, adding that patients’ claims from insurers would then inflate costs.
Tan said another way to control costs is in cutting down the average length of stay of a patient, which he believes Columbia Asia has achieved with better and more efficient care of patients, citing increased technological use as a main driver of this efficiency. “There’s a tendency [for hospitals] to have a key performance indicator that talks about filling up its occupancy rate. So, if you don’t have enough patients walking in, you tend to keep current patients longer, when, in actual fact, they should be at home with their families. From a hospital’s perspective, when you keep them longer, you incur extra costs.”
“[Inflation] is not [necessarily] about whether your panadol is 10 sen or 20 sen, it’s about how you manage your patients effectively and efficiently. And, we like to believe that we [show a good example in providing] effective and efficient healthcare,” said Tan.
“Our margins are becoming smaller and smaller. I was talking about 17% to 18% last year. Now, a lot of developers are talking below 15% or 16% [gross profit margin]. Margins are being sqeezed.”
For example, steel prices in Malaysia and Thailand are similar, at about RM1,700 per tonne. But no thanks to the levy imposed by the government, Malaysian contractors are paying up to RM2,800 per tonne.
Citing Moody’s External Vulnerability Indicator — a measure of short-term external debt by remaining maturity over reserves — which was used in the article, BNM said: “These short-term external debts are not a material risk.
“Most of it is accounted [for] by the banking sector, reflecting banks’ operations. Correspondingly, banks have placements abroad to mitigate currency and maturity mismatches,” the bank added.
BNM said short-term debt included inter-company loans which the bank said are subject to “flexible and concessionary terms”, as well as trade credits which “are usually backed by export earnings, which do not entail a claim on international reserves”.
“For example, one of the requirements for GST is service providers need to have a place of supply, or a permanent establishment in Malaysia, and if their place of supply is elsewhere other than Malaysia, it becomes a bit difficult to tax, so we are looking into this. To tell you the truth nobody really knows how big the monster is out there, once we amend the law and look at the details we will know, it runs into several billions. We will be in consultation with industry players on this, and we hope to be able to [table] the amendment at the next parliamentary seating,” said Subromaniam.
Subromaniam shared that at present, there are 453,000 companies that have registered for GST. Out of this number, approximately 100,000 companies were small scale companies which had annual turnover of less than RM500,000, but had registered for GST voluntarily. These companies had registered so that they can claim input taxes, and also the bigger companies tend to not want to deal with [smaller companies] that have not registered for GST,” he said.