Goh Ban Huat looking to expand sanitary ware biz overseas

GBH is involves in making the sea hive system, which consists of hexagonal interlocking extruded armour units that safe guards against wave and climate erosion.

KUALA LUMPUR: Goh Ban Huat Bhd (GBH), which mainly trades in sanitary ware and table ware, is exploring options to expand beyond the domestic market, like Vietnam, says CIMB Equities Research.

It said on Wednesday that according to GBH’s 1QFY18, the outlook for the sanitary ware business is expected to be challenging for the remainder of the year due to the weak Ringgit, which increases the cost of purchase. 

The dampening demand from the sluggish property market is likely to be a drag on earnings. 

“Following the completion of the sale of GBH’s properties, the company has been continually and diligently looking for other new business opportunities,” it  said. 

CIMB Research said the recent acquisition of World Grain Sdn Bhd is to enable GBH to venture into new businesses. 

It cited the latest proposed acquisition of property (1.05 hectare land) from Puncak Melati Sdn Bhd will enable GBH to develop the land when the sentiment in the property market improves. 

“GBH is currently trading at an extremely high 12-month trailing price-to-earnings (P/E) of 105.2 times (44.4 times if exclude 82 sen net cash per share),” it said.

To recap, GBH’s sanitary ware include “instinjak” bidet spout, basin, urinal, and low pressure flush valve and table ware such as plates, bowls or cups. 

GBH trades sanitary ware and tableware under its own brand and the Kohler brand (a sanitary ware brand for which it serves as a distributor). The products are sourced from China. 

GBH, through its associate company (Time Galerie (M) Sdn Bhd), also operates a chain of watch and clock retail stores in Malaysia. 

Time Galerie has five concept-stores -- Time Galerie, 60 Minutes, Edessa, G-Factory and Casio Corner. As at Q2 2017, its retail network is supported by 73 branches nationwide.

GBH stopped its clay pipes manufacturing business in the 1QFY17 and had adversely impacted GBH’s FY16-17 financial performance. 

GBH has decided not to invest in a new plant due to the high capital expenditure involved, and as profit margins were expected to remain under pressure due to rising utilities costs. 

CIMB Research said in the first quarter, GBH posted a lower sales and profit before tax quarter-on-quarter, mainly due to the decreased sale from sanitary ware due to the softening property market. 

GBH’s result under trading segment has worsened from a profit before tax of RM820,000 in the 1QFY17 to a loss before tax of RM150,000 in the current quarter mainly due to the lower sales. 

“Despite the sluggish FY16-17 performance, GBH is comfortably in a net cash position of RM152.7mil as at Jun3 30, 2017. Net cash per share is 82 sen. According to the 2017 annual report, there is no immediate need for substantial capital expenditure. 

GBH only declared dividend (15 sen dividend per share) once during its 15-month FY15. Since then, no dividend was declared.  

CIMB Research said a little known property company called Paragon Adventure Sdn Bhd had on Sept 27, 2017 acquired 51% stake in GBH (RM1.40 per offer share and 40 sen per offer warrant 2010/2020) from business tycoon Tan Sri Robert Tan Hua Choon. 

Paragon Adventure is an investment holding company owned by Datuk Seri Edwin Tan (65%) and Datuk Seri Godwin Tan (35%), both of whom are active in property development in Johor.  

Tan Sri Tan Hua Choon, once dubbed the “Casio King” for being the only distributor of the brand’s watches and calculators, is the second largest shareholder and non-independent non-executive director, and chairman of GBH. 

He is also the Chairman of Jasa Kita Bhd (31.9% stakes) and JKG Land (10.8%). He holds FCW (25.4%); GPA Holdings Bhd (23.7%); and Marco Holdings Bhd (7.1%).