Company Notes 2018.02.09

Daibochi Plastic and Packaging Industry Q4 FY2017 Results

Daibochi is optimistic on achieving strong growth in the financial year ending 31 December 2018 as both Daibochi Malaysia and Daibochi Myanmar are expected to perform strongly. The Group is expecting several new export contracts to drive Daibochi Malaysia’s performance in 2018, comprising contracts to Indonesia as well as the Australia and New Zealand (ANZ) region.

In the first quarter of 2018 (1Q18), Daibochi Malaysia secured a new contract with a multinational customer (MNC) to supply flexible packaging to the ANZ region. The Group’s sales, technical and operations teams collaborated closely with the MNC particularly for its fast-moving consumer goods (FMCG) brand, and target to commence supply by the second quarter ending 30 June 2018. This marks the entry into a new product line for Daibochi Malaysia, thereby strengthening its value proposition to MNCs.

Daibochi Malaysia is also working towards commencement of flexible packaging supply to another two MNCs for their food and beverage and FMCG brands in Indonesia.

Meanwhile, Daibochi Myanmar is expected to deliver stellar growth in 2018, as it is actively pursuing new customers in Myanmar’s F&B and FMCG sectors. Additionally, Daibochi Myanmar aims to leverage its low-cost and geographical advantage to secure export contracts from costsensitive customers in various Southeast Asian countries.

Daibochi Myanmar will also tap into the Southeast Asia flexible packaging market. With our Myanmar operations securing the ISO 9001:2015 and Hazard Analysis and Critical Control Point food safety management system certifications since October 2017, together with the approval from the Myanmar Investment Commission in December 2017 to export out of the country, Daibochi Myanmar would now seek to enter qualification with MNCs to support their regional expansion programmes.


Bursa Malaysia Q4 FY2017 Results

The introduction of the stamp duty exemption for exchange-traded funds and structured warrants effective from 1 January 2018, is expected to enhance trading and vibrancy in the equity market. Bursa Malaysia will continue with its initiatives to enhance the breadth and depth of the ecosystem, amongst others, through the digitalisation of services, liberalisation of rules framework and greater diversification of the investor base to ensure that the Malaysian equity and derivatives markets are attractive and vibrant.

Datuk Seri Tajuddin added, “Our initiatives put in place over the years have built a strong foundation that has placed us on a firm footing to capitalise on new opportunities. In 2017 alone, the Exchange launched the Islamic Selling and Buying Negotiated Transaction and made a revision in the tick rule to provide market participants with greater price flexibility in performing regulated short selling. We will continue to work closely with our intermediaries to improve liquidity and increase trading activities. Similarly, we will expand our marketing efforts to build a strong IPO pipeline and look forward to rolling out our initiatives aimed at widening our products and services to create a conducive capital market
ecosystem for all market participants.”


Tasek Q4 FY2017 Results

The Board expects the intense pricing competition to continue to the next quarter and affect the Group’s performance. Construction works on the Government’s infrastructural projects of the MRT2 (SSP Line) and the LRT3 (Bandar Utama – Klang Line) are expected to improve demand for cement for this year. However, the soft property market is expected to continue to weigh down the demand for cement.


Focus Lumber Q4 FY2017 Results

We foresee the price of logs hovering at this level based on the current market supply and demand as well as our cost in securing logs supply. Operating environment is very challenging if the Ringgit Malaysia remains strong throughout the next financial year. However, selling price in US dollar which is increasing recently has partially offset these negative impacts.


Hartalega Q3 FY2018 Results

Nitrile glove now accounts for 61% of Malaysian rubber glove export.

Hartalega aims to launch its anti-microbial gloves in Europe by second quarter of 2018 and is working on securing Federal Drug Administration (FDA) approval to enter the US market. We will price this new product competitively to encourage better take up.


Scicom Q2 FY2018 Results

Over the course of the year, whilst the BPO division did not lose any major clients, the revenue contribution for some of these key clients decreased. The primary driver was an adverse change in market conditions for these multi-national clients. As a result, there has been a corresponding drop in customer interactions which led to a subsequent decrease in billable headcount. However Scicom does not expect this situation to deteriorate further with our current clients and the management further expects to increase revenues on the successful conversion of a healthy pipeline built over the last 12 months.


Hup Seng Industries Q4 FY2017 Results

Stronger market demand for biscuits mainly contributed to the positive growth in sales. Export sales of biscuits grew by 6% mainly from China market. Domestic sales grew by 5% mainly from modern channel.

Escalating input cost eroded margin growth of the Group despite an improvement in turnover. Higher promotional expenses and other operating costs including fuel costs also depressed the profit performance.


Salutica Q2 FY2018 Results

The touch enabling functionality application to other various industry segments such as automotive and electronic appliances will be one of the segment which our Group will continue to focus in order to generate additional revenue stream, albeit at a slower pace. Meanwhile, the development of healthcare related products under in-house brand FOBO is still ongoing.


Tasco Q3 FY2018 Results

However, as our recent acquisition of Gold Cold Transport was fully financed via bank borrowings, our bottom line was significantly impacted by higher finance costs. In that respect, the Group would be evaluating the various ways and available options, in order to mitigate this situation in the medium term. Going forward, the downside risks for the Group would continue to be rising operational costs (in particular, relating to manpower and fuel costs), higher interest costs due to aforesaid reason, and keen competition for cargo in our traditional core businesses. We will continue to maintain our strategy to focus on servicing our customers with innovative logistics solutions and expand our logistics capacity when it is beneficial to our shareholders’ value.

JHM anticipates boost from new orders in 2H18

JHM designs and develops MECs that are used in subsegments of the electronic component industry, and electronic devices like digital cameras, mobile phones, personal digital assistants and automobile lightings. In both the automotive and aerospace segments, it manufactures, among others, MECs for the production of high brightness light-emitting diodes (LEDs).

“Although we have orders to fulfil in the automotive segment, we are being hampered by the material shortage, including for passive components like resistors and capacitors, which are being bought up by big players. So, we have money to buy, but we are not able to do so. In any case, we expect the situation to recover in the second half of this year,” Tan said.

“We are also aggressively working to penetrate the Japanese and European markets. In Japan, we have met with one of the biggest automotive light makers there, who is satisfied with our capability and set-up. We are now waiting for them to give us the request for [a] quote. In March, we will be allowed to bid for two projects. If our price is good for them, we will go for maximum production, meaning FY18 would end on a very good note,” he said.

“Mace has a good customer base, including multinational corporations. We intend to tap and expand our printed circuit board and assembly (PCBA) business. Since we are already in the PCBA business, Mace’s contribution will help stabilise our business, instead of the group having to depend only on the LED automotive segment,” he said.

The PCBA business is part of the automotive segment (which generates 80% of its revenue). Meanwhile, some 12% of its turnover comes from industrial products, under which JHM makes box builds for vending machines and fan controllers. The remainder of the group’s turnover comes from its telecommunications segment.


Fernandes: India to be a big market for AirAsia X

“Super proud of the turnaround happening at AirAsia X. We need to finish off cleaning up the balance sheet in the fourth quarter, but we are going to have a good year in 2018. We are now taking the very good value (Airbus) 330 to fill our capacity before moving to the next generation of aircraft, either the (Airbus) 330 neo or (Boeing) 787. I am very, very bullish on AirAsia X.”

“Stars lining up, ringgit strengthening and oil going down as we predicted. There is just too much oil and with shale, fuel demand will continue to go down.”


Scicom to develop tourism management system for Cambodia

In a stock exchange filing today, the company said the project period is five years, with an option to extend for two more years. “The anticipated revenue from this contract is predicted on the number of air travellers to and from the Kingdom of Cambodia,” it said, but did not indicate the estimated value of the project. It expects the project to contribute positively to the earnings and net assets per share of the company going forward.

Company Notes 2017.12.01

GHL Systems Q3 FY2017 Results

The Group has successfully deployed since 2015, its TPA merchant acquiring tie-ups with CIMB (physical merchants) and Global Payments (online and physical merchants) and in 2016, additional tie-ups with Alipay (Thailand) and RCBC group (Philippines). GHL group has commenced merchant acquiring for Alipay in Malaysia in 2Q17 and AFPI (Beep card) in Philippines for merchant acquiring in expected in 4Q17. The group remains optimistic of further developing TPA as a key growth engine for the group given the changes in the payment landscape as e-payments gain further traction as driven by not only regulatory directives but also positive changes in consumer preferences towards e-payments.


JHM Consolidated Q3 FY2017 Results

The declined in revenue was mainly due to worldwide components shortage and extended lead times in the supply chain.

The average inventory turnover days has reduced from 53 days to 39 days as a result of the continuing efforts of the Group in improving the inventory turnover efficiently.

Despite of facing the worldwide shortage of raw materials, particularly the passives, the Group’s outlook remains strong and bright with the growing acceptance of LED lamps in automotive market.


Dufu Technology Q3 FY2017 Results

We expect sales to continue to remain favorable towards end of 2017 as our major product is driven by the growth in high-capacity nearline HDDs as well as stabilization of client storage demand. The long-term future of HDDs are likely rests with high capacity HDDs, particularly in data centers serving cloud storage applications. The demand for high capacity storage drives, enhanced performance, and lower storage cost is set to rise. Global internet penetration, the rise in e-commerce in emerging markets, and the current trend for high-resolution media standards are the likely drivers for the continuing rise in global data storage demand.


Perak Transit Q3 FY2017 Results

The outlook of integrated public transportation terminal operations segment is expected to the favourable driven by the Group’s plans for expansion in other part of Perak, whereby the construction of the Terminal Kampar has commenced and it is on schedule. It is expected to be completed by 4th quarter of 2018. In addition to Terminal Kampar, the Group’s plans include similar integrated public transportation terminal in Bidor and Tronoh. As of this juncture, the Group is unable to determine the construction cost for the terminals to be built as the construction project is still at its preliminary stage and the approvals for construction have yet to be obtained from the relevant authorities. In this regards to the status of the Bidor and Tronoh lands, the acquisition of the lands are pending completion subject
to the fulfilment of the condition precedent as announced on 19 January 2017 (Bidor), 18 September 2017 (Bidor), 28 March 2017 (Tronoh) and 27 November 2017 (Tronoh) respectively.

The Group’s bus operations segments outlook is also positive driven by Stage Bus Service Transformation programme as the operation runs all the 19 approved routes since September 2016 with 45 express buses fully delivered in March 2017.


Pos Malaysia Q2 FY2018 Results

The Group’s prospects remain positive as our business continues to be largely driven by the strong e-Commerce growth in Malaysia and we are optimistic that the establishment of the Digital Free Trade Zone (DFTZ) will drive cross-border e-Commerce volume, especially for Malaysian small and medium enterprises (SMEs). This is expected to be positive for the prospects of our e-Commerce related businesses, namely our courier, eFulfilment, air cargo logistics and international mail business.

On the digital front, we are looking to introduce digital services that are relevant to our customers as digitalisation and demographic changes have encouraged us to be more innovative in providing services that suit the changing lifestyle needs of the Malaysian public, especially the younger generation. Accordingly, we expect to launch our Digital Mailbox product in early 2018 that will provide a range of digital services catering to mobile lifestyles. We are confident that our Digital Mailbox will, over time, become a key digital product offering.


EG Industries Q1 FY2018 Results

The Group is in the midst of construction of the IPC hub and expects to begin its IPC operations in December 2017. With the commencement of IPC operations, the Group is expected to obtain more competitive raw material prices through larger scale of procurement activities to maintain its competitiveness in global Electronic Manufacturing Services (“EMS”) market.


CAB Cakaran Q4 FY2017 Results

The integrated poultry farming and processing division’s performance in the next quarter may be moderately affected by the lower average selling price of broilers but will be mitigated by the lower cost of feeds. The recent strengthening of the Malaysian Ringgit and the world wide over supply of corn and soya, has contributed to the lower cost of feeds.

The value added food products manufacturing and trading division’s performance will be impacted by the continuous losses at Farm’s Best Food Industries Sdn. Bhd.. Management expects the performance of this division to show improvement after the measure undertaken to improve operational efficiency as well as the upgrading of facilities are completed over the next few months.


Ta Ann Q3 FY2017 Results

Performance for the palm oil sector is expected to remain as the main profit contributor in the coming quarter. For timber sector, the underperformance is due to the low logs production in compliance with the certification exercise as well as the restricting logs export quota of 20% that took effect in July 2017.

Given to the low plywood inventory in Japan coupled with the infrastructure construction works for the coming Olympics which has accepted the Company plywood products for the said construction works, we expect the timber market to rebound.


OCK Group Q3 FY2017 Results

The Group aims to grow its recurring revenue business via build-own-and-lease and acquiring existing tower sites operators in ASEAN. For our tower leasing business expansion, the Group is leveraging on its established presence in ASEAN and its vast experiences in building telecommunication infrastructures and site maintenance of telecommunication infrastructure. The build-own-and-lease business model is based on building, owning and leasing back the tower sites to telecommunication operators over a long-term period.


Notion Vtec Q4 FY2017 Results

The auto braking plungers business is expected to have a double-digit growth in FY2018 especially in electric and hybrid cars. The production for the lifestyle consumer electronics segment will take to production as soon as possible as it is a high volume product. We have also made inroads to a major MNC production equipment maker in the semi-conductor space which has good prospects. The Group continues to invest in new technologies and diversifying its customer and industry bases.

Finally, due to the need to conserve cash in the light of the fire incident the Board has decided to defer any dividend payment for this and next quarter until things are back to normal.


IQ Group Q2 FY2018 Results

The Group’s first half year performance has been below expectations. Sales slowed during this period and performance was further impacted by some delays in the conclusion of new product sales. IQ is however blessed with considerable opportunity from both new and established business relations with on-going product development and related planned launches in the pipeline. The current volume of product development requirements is good from a new business perspective, but challenging from a resource and timing standpoint. We see that the current conditions will remain throughout the remainder of this financial year, but going forward thereafter we anticipate positive performance as the various new products are rolled out into the market. Improvements to IQ’s R&D structure are already implemented to accelerate results and to better position our speed to opportunity going forward.

Paper mill operations to boost BHS Industries’ earnings

As it stands BHS earlier this month signed a memorandum of understanding with China Nuclear Industry Huaxing Construction Co Ltd to jointly develop the second and third phases of the project. Phase 2 involves a factory with the capacity to produce 100,000 tonnes of box liner paper as well as 120,000 tonnes of corrugated paper. Meanwhile, Phase 3 will involve another factory with a capacity to produce 65,000 tonnes of tissue paper. Interestingly, Lim added that, “We are targeting to give the award on the final negotiation to the Chinese party for the main building of the factory (Phase 1 for 10,000 tonnes wood-free pulp and paper plant).”

Note that BHS has secured a five-year contract from the Malaysian government to publish past examination papers. It also disposed of a plot of land (from the 410-acre GTP project) for RM5.3 million to a third party to develop. The group is still looking for potential partners to jointly develop the project’s fourth and fifth phases. Phase 4 will involve the construction and development of a feed mill with production capacity of 30,000 tonnes of agro-feed using the microbial fermentation technology, as well as a fertiliser plant with a production capacity of 50,000 tonnes of fertiliser using the by-products produced from the biogas plant.

Phase 5 has been earmarked for light industries involving the construction and development of packaging and printing factories. Additionally, BHS is also looking to expand the GTP model to other states. The group signed a memorandum of understanding with Sarawak Land Consolidation and Rehabilitation Authority subsidiary Bau Palm Oil Mill Sdn Bhd (Bapom) on Nov 10 to jointly develop, implement and finance a waste management project to convert the palm oil biomass, which is supplied by Bapom into commercially viable products. On top of that, BHS is actively looking to develop a third GTP in Johor in the near future; a first step before spinning off the concept to other states as well. “We are targeting Johor as there are many palm oil mills over there,” explained Lim, adding that in the next four years the group could be looking at Indonesia for expansion as well.”

Printing and publishing remain the core business of the group, accounting for about 80% of its revenue in FY17. The remaining 20% came from park development and management activities. “[Revenue] contribution is mainly from our book printing and publishing [business] now, but you will soon see it overtaken by GTP Phase 1,” said Lim. He expects the revenue contributions to invert, with 80% of the revenue coming from GTP Pekan and 20% from the existing printing and publishing business.


Top Glove wants to buy Aspion for RM1.3bil to boost profits

Aspion is currently the second-largest producer of surgical gloves in the world, with an annual production of 1.4 billion pieces or an 18% market share. Lim said production at Aspion is projected to increase by another 1.6 billion pieces by 2019 due to the ongoing capacity expansion at its Kulim plant in Kedah. Top Glove has a 12% global market share in this segment, producing 665 million pieces a year. The surgical glove segment, prior to the acquisition, contributed about 5% of Top Glove’s revenue.

Aspion’s Kulim plant houses the company’s most recent technology and research and development centre. It also has manufacturing facilities in Kluang, Johor and Kota Bahru, Kelantan, catering mainly for examination gloves. Aspion owns cutting-edge technology, namely, its Finessis surgical glove which is known to be the only technology capable of reducing the number of viruses (such as HIV) transferred in cases of percutaneous injury.


EG Industries allocates RM30mil for plant expansion

Group chief executive officer and executive director Alex Kang said the expansion, to be funded through bank borrowings and internally generated funds, was to cater to the strong enquiries from customers for box-build contracts, reiterating the company’s stronger proposition in this segment.

“Not only has our box-build segment improved, but also our printed circuit board assembly (PCBA) segment as it remains the main revenue generator for EG Industries.”


Kim Teck Cheong Consolidated to realise its investments in FY19

In March, KTC acquired a 60% equity interest in Grandtop Marketing Sdn Bhd for B$600,000, which is principally engaged in the business of distribution of CPG in Brunei. He said the group plans to further invest in its infrastructure in FY18 — albeit with a smaller allocation — to take advantage of opportunities as they arise. He added that KTC is currently in talks with five to six notable third-party CPG brands in Sabah and Sarawak, which may come on stream in FY18.


Freight Management sees 10% growth in FY18 profit

“There is no such thing as saturation in the market as there are no more avenues to grow. There will always be customers who are looking for improvements in service. We just have to take advantage of our strength to gain market share.”

The sea freight segment will remain the group’s core business. “We have always been very strong in our sea freight segment, so it’s only natural that we try to keep building and growing this particular segment.”

On the group’s e-commerce segment under 65%-owned FM Hubwire Sdn Bhd, Chew said although there is an opportunity to grow, the loss-making business remains a challenge as it is a relatively new area for the group. “We started this about a year ago, but honestly the business has not really gained traction. We are exploring ways to boost the business. Although it may take a while, if we don’t get involved now it will be too late later. It is a challenge now, but we have the resources [to sustain it],” he said. The group, he added, hopes to see some traction in the business by end-FY18, and to turn a profit by FY19.