Investor eyes up to 20% stake in Resintech


PETALING JAYA: A new shareholder is believed to be surfacing in piping company Resintech Bhd, looking to capitalise on its piping capabilities and synergising with it to bid for large-scale projects, according to a source.

Selangor is looking to upgrade its water infrastructure, as its average non-revenue water for 2015 stood at 32% or some 1.5 million cubic metres a day.

This is the same as in 2011. Most of the water pipes in Selangor and Kuala Lumpur are over 30 years old.

Analysts had estimated that capital investment for the replacement of the pipes and reparation works could be worth almost RM1bil.

The new shareholder is said to be eyeing a stake of between 15% and 20% in the family-owned company, according to sources.

It would not cost much to buy a stake in Resintech, considering that the company only had a market capitalisation of RM67mil at its closing price of 49.5 sen a share yesterday.

Resintech’s prized jewel is its factory in Teluk Panglima Garang, Selangor.

This plant houses state-of-the-art production machinery and efficient infrastructure. Accredited with the MS ISO 9001:2000 certification, this factory was valued at RM22.62mil as of March 31, 2015.

Another key attraction of the company could be in the property assets it owns.

Based on its 2016 annual report, Resintech has factories, warehouses, shoplots and vacant land worth some RM100mil in Malaysia, Indonesia and Cambodia.

At its current share price of 49.5 sen, Resintech is trading at a significant discount to its book value of 90 sen. It has a forward price-earnings ratio of 13.69 times and offers a dividend yield of 2.45%.

The trading volume in Resintech has picked up significantly over the last two days. Yesterday, 13.02 million shares changed hands, with the stock closing 0.5 sen up to 49.5 sen.

The stock recorded its five-year high of 52 sen on May 25 this year.

Resintech shares are tightly held by its major shareholders.

The managing director and single largest shareholder of the company is Datuk Teh Kim Poo, who owns 43% of the company. This is followed by Tema Evolusi Sdn Bhd, which owns 12%. Co-founder and executive director Datin Gan Jew, who is Teh’s wife, owns a 7% stake.

Resintech is a fully integrated group involved in designing, manufacturing and marketing a diversified range of UPVC and polyethylene products.

For the first quarter to June 30, Resintech’s net profit doubled from RM407,000 to RM962,000 on the back of a 7.93% increase in revenue to RM18.65mil.

For its year ended March 31, net profit was 25.65% lower at RM4.35mil on the back of a 16% drop in revenue to RM77.21mil.

The poorer results were due to lower demand, as well as a lower fair value gain of RM3.2mil.

Resintech’s vision is to become the manufacturer and marketer with the widest range of plastic pipes and containers in the country.

In its 2016 annual report, Resintech said that the railway sector is forecast to be the fastest-growing infrastructure subsector in Malaysia, and it expected to gain from the light rail transit and mass rapid transit projects, West Coast Expressway, central Spine Road, development of the Pan-Borneo Highway in Sabah and Sarawak, and the Pengerang projects.

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