https://asia.nikkei.com/Markets/Nikkei-Markets/Kumpulan-Fima-Plans-To-Spend-Up-To-MYR400-Mln-To-Boost-Plantation-Landbank-Official UALA LUMPUR (Aug 22) -- Kumpulan Fima, a Malaysian manufacturing, chemical storage-to-plantation company, plans to spend up to 400 million ringgit ($93.15 million) to boost palm plantation landbank by 10,000 hectares in the next three years, its managing director said.

The company plans at least one purchase this year and is willing to spend up to 300 million ringgit on a single deal, Roslan Hamir told Nikkei Markets. This will help to partly offset slowing core manufacturing business that currently contributes to 70% of the group's pre-tax profit, he said.

"We are facing stiff competition not just from local but also foreign players" in the manufacturing division, which mainly prints travel documents and stamps for government clients, Roslan said. Increasing use of digital documentation could also affect demand, he noted.

Last fiscal year, Kumpulan Fima wrote off 29.37 million ringgit in impairments for its Indonesian plantation business due to an ongoing legal dispute with authorities on land usage. This pushed net profit to its lowest in five years, despite a rise in revenue.

More than two-thirds of Kumpulan Fima's nearly 30,000 hectares of estates are in Indonesia, home to the world's biggest oil palm producers including Wilmar and Sime Darby. Palm oil prices, meanwhile, have fallen nearly 14% so far this year.

But rising operational costs as well as ongoing court proceedings are diminishing Indonesia's appeal for Kumpulan Fima, Roslan said. Diversifying further into Malaysia-based plantation assets will mitigate any risk of losing right over Indonesian land in the future, he added.

Kumpulan could "potentially" raise net profit by 5,000 ringgit for every hectare it adds in Peninsular Malaysia, Roslan said. This will lift profit at plantation business to match earnings from manufacturing by 2020, he said.

In the fiscal year ending Mar. 31, Kumpulan's net profit dropped 11.38% to 56.73 million ringgit, while revenue edged 1.13% higher on year to 547.21 million ringgit.

The benchmark crude palm oil futures contract on Bursa Malaysia Derivatives for November delivery was 2,711 ringgit a ton. Shares of Kumpulan Fima, which have gained 10% so far this year, are currently unchanged at 1.87 ringgit apiece.

Salutica Expects Headset Sales Volume To Rise By Half Next Year-Official
By Alexander Winifred
Nikkei Markets
KUALA LUMPUR (Aug 10) -- Malaysian electronics products manufacturer Salutica expects headsets sales volume to grow by half next year, aided by a new model that will compete with Apple's AirPods, its managing director said.

"We hope to hit three million" units from around two million units by the next fiscal year ending Jun. 30, James Lim told Nikkei Markets in an interview.

The company is partnering with an international consumer products brand to "create something that can beat Apple" and plans to launch the new product in September, he said.

Salutica's new earphone is part of a three-year plan to diversify income that includes raising sales of products sold under in-house brand FOBO to 25% of total revenue from the current 3%, Lim said. FOBO products include Bluetooth tracking devices and tire pressure detectors, as well as healthcare-related products, which are currently under development.

The Perak-based Salutica competes with manufacturers like China's Geortek Inc. to make the earphones that are mostly exported and sold across the world. Currently, production of earphones for Sony, Jaybird and Plantronics, make up over 90% of the company's annual revenue.

Apple sparked a stir when it released the AirPods along with the seventh-generation iPhone last year, ditching headphone jacks and the century-old technology known as analog for Bluetooth to transmit audio signals. "In five years' time, perhaps 50% of all headphones will be wireless," Lim predicts.

Salutica is in "serious discussions" with several car manufacturers to exclusively supply its tire pressure detection system, Lim said without elaborating. It also plans to launch a new Bluetooth sensor product by Dec. 25 this year, he added.

While the company expects to "maintain" last year's revenue levels for its earphone manufacturing division in fiscal 2017, it targets own-brand and original equipment sales growth of up to 20% driven by rising demand from existing and new clients, Lim said.

Salutica reported a net profit of 24.33 million ringgit ($5.67 million) on a record revenue of 241.83 million ringgit last fiscal year. Sales of Bluetooth-enabled headsets totalled 223.2 million ringgit, rising from 174.03 million ringgit a year earlier on the back of robust demand.

Shares of Salutica, which have gained 29.8% over the past year, are currently trading 0.7% lower at 1.48 ringgit apiece.


https://asia.nikkei.com/Markets/Nikkei-Markets/INTERVIEW-Salutica-Expects-Headset-Sales-Volume-To-Rise-By-Half-Next-Year-Official

KUALA LUMPUR (Jul 12) -- Thong Guan Industries, a Malaysian packaging products maker, is looking to buy a smaller rival in a deal that could be worth about 100 million ringgit ($23.27 million), its executive director said.

The company is in talks with targets in Malaysia and in Vietnam for potential acquisition, Alvin Ang told Nikkei Markets in an interview. A successful purchase will boost Thong Guan's production capacity and help catch up with larger rival Scientex, he said.

While the company expects to complete a purchase within a year, "a deal could happen any time," Ang said without elaborating.

Thong Guan manufactures stretch films, garbage bags, industrial bags and plastic food wrap, which collectively make up close to 90% of its total revenue. The company also has a food-and-beverage arm that makes tea and coffee products.

Scientex, one of the world's largest producers of industrial stretch film, currently produces up to 298,000 tons per year. Thong Guan has a total capacity of 120,000 tons a year and is adding production lines for stretch film and food wraps, while mulling capacity expansion for other products.

"We can't deny size is important and we cannot be too far behind," competitors such as Scientex as that could diminish the company's ability to negotiate favorable trade terms with suppliers and financiers, said Ang.

Thong Guan expects to sustain the 10% revenue growth posted in the first quarter of this year, driven mostly by capacity expansion, Ang said.

Higher sales of value-added products such as nano-layer films -- super-thin stretch wraps that can shave 30% off the weight of traditional packaging while being more durable -- could push pre-tax margin level above the current 9.7%, he said.

"Global trade growth has had a very positive effect on demand, especially from Korea and China," Ang said. The company will gradually shift to higher margin products such as plastic gloves, he said.

This could help the company achieve its target of exceeding a billion ringgit in packaging product revenue by 2020, Ang said.

Thong Guan reported a 50.8% increase in net profit in 2016 to 58.09 million ringgit from 38.51 million ringgit a year ago. Revenue grew 5% in that period to 746.85 million ringgit from 710.99 million ringgit a year earlier.

Shares of Thong Guan that have lost 1.89% so far this year are currently unchanged at 4.15 ringgit. http://asia.nikkei.com/Markets/Nikkei-Markets/INTERVIEW-Thong-Guan-Industries-In-Talks-To-Buy-Packaging-Company-For-About-100-Million-Ringgit-Official?page=2

Malaysia’s Eversendai Expects To Return To Profit This Year-Chairman

KUALA LUMPUR (Jun 13) -- Eversendai Corporation, a Malaysian specialist structural steel construction company, expects to return to net profit in 2017 following cost-cutting measures backed by higher orders from the Midde East, its executive chairman said.

The company will delay capital-intensive expansion, while focusing on securing more contracts and delivering existing orders totalling 3.2 billion ringgit over the next two years, A. K. Nathan told Nikkei Markets in an interview. Margins could widen to 15% from last year’s “single-digit” partly through cost control, he said.

“If margins are not attractive in one region, we will move to other markets,” Nathan said, “Like in the Middle East, when it comes to (steel structures of) high-rise buildings, no one can compete with us.”

Saudi Arabia, Egypt, the United Arab Emirates, Bahrain and Yemen snapped ties to Qatar alleging the monarchy, which controls the world’s largest natural gas reserve, is undermining regional stability by supporting militant groups linked to Shia-majority Iran.

The political rift could prompt clients to turn to Eversendai and lift revenue contribution from Middle East to as much as 65% from 60% in 2016, Nathan said. That could in-part help the company achieve total revenue target of 2 billion ringgit ($468.82 million) this year, he said.

Local contractors working on projects in opposing states are now expected to withdraw, paving the way for Eversendai to step in, Nathan said. Eversendai currently has projects in Qatar, Saudi Arabia and the United Arab Emirates.

“Some projects we lost were awarded to companies in countries being affected by this issue. We could very well get back those projects. I’ve already gotten calls from a few clients in the Middle East asking ‘Hey, can you take this up?” said Nathan.

Eversendai swung to net loss of 257.5 million ringgit last year mainly due to impairment charges while revenue fell 12% to 1.58 billion ringgit from 2015.

A major portion of the impairment charge arose from delays in securing financing for its Aryan liftboat project. Another investment in Technics Oil & Gas that turned sour after the Singaporean company was placed under judicial management also added to impairment charges.

Vahana Holdings, which owns a 72% stake in Eversendai, is currently in talks with potential clients to secure a charter contract for Aryan, Nathan said. A deal could be secured in the coming quarters, he said without elaborating. Vahana Holdings is largely controlled by Nathan.

Analysts, including Kenanga Investment Bank’s Lum Joe Shen, have previously flagged a potential impairment risk from any delay in securing financing for its second liftboat project Arjun.

Liftboat refers to self-propelled, self-elevating vessel that typically carry equipment and supplies to support offshore mineral exploration and production or offshore construction activities.

“Once we secure a charter for the first liftboat, it’ll be easier for us to secure financing for our second liftboat,” said Nathan.

Shares of Eversendai, which have gained 91.15% over the past 12 months, were last trading 4.9% higher at 1.07 ringgit apiece.