DESPITE the bearish market, Sarawak engineering solutions provider Pansar Bhd has enjoyed a spectacular rise in its share price.
On a year-to-date basis, the stock is up two-fold at RM1.17 a unit as of Thursday’s close.
Last month, the Main Market-listed company received an unusual market activity (UMA) query from Bursa Malaysia following a sudden 68% surge in its share price to 79 sen in just over a week.
Dealers say investors have chased up this stock due to its Sarawak connections and possible project wins in that state where a number of mega projects are ongoing and being started. Announcements by Sarawak state about launching a light rail transit (LRT) project in the state that will cost about RM10.8bil, where it will be the largest single state-funded project, is also boosting interest in Sarawak stocks, dealers point out.
In terms of corporate exercises, Pansar completed a private placement exercise with the listing of 28 million new shares, representing an estimated 10% of Pansar’s total issued shares. It raised some RM12mil from that exercise, the funds of which are to be used for capital expenditure.
Then this week, the group announced a free warrant exercise, which boosted the stock’s price by another 2.63%.
Pansar proposed the issuance of 154 million free warrants on the basis of one warrant for every two existing ordinary shares held.
So what is driving up the stock?
One possibility is that Pansar is being linked to potential projects related to the Pan Borneo Highway.
Pansar managing director Datuk Jason Tai Hee (pic) tells StarBizWeek that the group is already benefiting from the construction of the Pan Borneo Highway project in Sarawak and Sabah.
“Going forward, we are also particularly interested in participating in auxiliary projects, such as guardrails, lampposts, lighting and other utilities. In line with the government’s push for rural development, we are working to introduce our industrialised building system (IBS) system to the government,” he says in an email reply to StarBizWeek.
A dealer familiar with the company reckons that Pansar’s order book is within the range of RM100mil to RM200mil.
Additionally, as mentioned in the query to the UMA, Pansar has said that it is in the midst of bidding, discussing, and reviewing some contracts, but no letter of award has been received to date.
Established in 1961, Pansar is involved in the marketing and distribution of building products, marine and industrial engineering, agro engineering, electrical and office automation supplies, as well as electrical and mechanical. Pansar has a market capitalisation of RM360.36mil. For the nine-month period ended Dec 31, 2017, Pansar registered a net profit of RM6.91mil, a 54% increase from the previous corresponding period.
The main revenue contributor to the group is building products, which make up 36.4% or RM102.01mil of total revenue for the nine-month period.
This is followed by the marine and industrial segment, generating 27.6% or RM77.46mil to Pansar’s revenue.
Pansar also has a branch in Singapore catering to the construction sector there with secured orders in place, says Tai.
Going forward, Tai expects growth for its building products and electrical and office automation segments to stem from the supplies to major infrastructure projects, especially in Sarawak and Sabah.
He says the continuous push by the government to develop rural areas has proven to be beneficial to Pansar.
“It gives us the opportunity to supply IBS building systems and ancillary items such as lighting, pumps, and cladding material,” says Tai. As for agro engineering, the stability of palm oil price and a generally positive outlook for the plantations sector is encouraging to the group.
“Plantations are still a growing business in Sarawak. Thanks to our new dealership, we are now also supplying heavy equipment to cater to this sector.
Pansar provides a host of engineering related services to the agriculture sector ranging from irrigation systems to fertilizers to harveters, rice transplanters and millers to fertiliser.
“Overall, the recent strengthening and stabilisation of the ringgit has been beneficial to Pansar as a group, seeing that we are a net importer,” says Tai.
Tai shares that plans for the year entails leveraging on its resources and strengths to improve efficiency.
This includes reducing wastages and promoting more cross collaboration across Pansar’s branches. “Through cross collaborations, we can ensure that the inventory is at optimum levels to meet customer demand, as well as improve stock levels.
“We will do more product bundling in order to get a larger dollar share.
“As proven successful over the past year, we will also continue to centralise logistical control to improve efficiency,” Tai reveals.
He adds that Pansar aims to enhance its marketing efforts to ensure that existing and new customers are aware of the group’s full range of products, through social media channels and leveraging on its customer database.
“We will tap into rural markets instead of just focusing on urban areas, by offering incentives to our sales teams to go to the underserved customers.
“Pansar is open to acquisitions going forward, and we shall continue to seek inorganic ways to grow together with the right partner,” says Tai.
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