Chin Hin eyes land in Johor to build new factories

Top gainer: Chiau (3rd from left) and other directors of the company reacting to the excellent performance of the stock during the listing ceremony at Bursa.

KUALA LUMPUR: Building material manufacturer Chin Hin Group Bhd is looking to acquire land in Johor to build new facilities to boost its manufacturing division.

“We are still in the early stages of the planning but if all goes well, we hope to secure a sizeable swath of land where we will build two factories. It will further drive growth in our manufacturing division and contribute to group revenue although we are expecting it to be realised in two to three years,” Chin Hin executive director cum chief financial officer Lee Hai Ping told StarBiz on the sidelines of the company’s listing at Bursa Malaysia yesterday.

Opening at 81 sen, the group’s shares rose 18.5 sen or 28% to become the bourse’s top gainer, before ending the day at 82 sen.

Chin Hin’s initial public offering (IPO) entailed a public issue of 63.2 million new shares and an offer for sale of 65 million existing shares of 65 sen each.

Group managing director Chiau Haw Choon said the company was expecting double-digit growth in net profit for the financial year ending Dec 31, 2016, mainly driven by its manufacturing business.

“We are confident our group can provide consistent growth over the next two years,” he said.

From the IPO proceeds of RM41mil, RM15mil will go into upgrading the company’s G-Cast Concrete and Starken AAC manufacturing facilities, which will begin in the first half of the year and be completed in the second half.

Chin Hin’s precast order book stood at RM100mil, a substantial composition of the group’s total order book of RM170mil. Most of its business came from infrastructure projects. Chin Hin, which had a gearing of 1.39 post listing, also expected to lower its bank borrowings of over RM300mil.

“It is healthy for us to maintain a moderate level of gearing as over 80% of our bank borrowings are short-term borrowings needed for our distribution business,” Lee said. “We need the operating cash flow to operate.” Chiau said the group’s financial year 2015 net profit rose to RM30.22mil from RM30.19mil the year before.

Revenue came in at RM1.2bil, marginally lower than RM1.22bil the year before.

The group had announced on Bursa that it had benefited from one-off gains from the disposal of properties of RM4.93mil and fair value gain of RM5.88mil from the revaluation of factories in Nilai and Bandar Serendah.

The group said it was confident of exporting RM40mil worth of goods this year after exceeding last year’s target of RM20mil.

“We are in talks with potential Vietnam and Indonesian buyers,” Chiau said, adding that the weaker ringgit did not affect material costs for the group as most of it was sourced locally.

Meanwhile, the group was looking to expand its business into Sabah and Sarawak.

“We need time to build our network there. As we have to find a reliable distributor there, this will take some time,” Lee said.