GEORGETOWN: Eonmetall Group Bhd is investing more than RM100mil this year and 2019 in its steel racking and machinery and equipment (M&E) business.

Group managing director Yeoh Cheng Chye said about 70% of the budget would go into the construction of 10 palm oil solvent extraction plants for a government-linked company in the plantation business.

“This is a built-operate-transfer project which will take effect this year,” he said. He expected the project start generating sales contribution from 2019.

The M&E segment is focused on the production of palm fibre oil extraction plant and palm kernel oil extraction plant, a patented specialist equipment designed to increase oil extraction rate for the palm oil industry.

Eonmetall will also build two steel racking plants in Bangladesh and China. The two plants, which are under the steel racking division, will produce static and dynamic or automated racking system under the Constructor brandname.

“The two plants should be ready for operation in 2019,” Yeoh said, adding that the company has secured the manufacturing rights for the raking system in Malaysia, Bangladesh, and China, as well as the distribution rights in other countries in Asia.

The contribution from this segment should start in the the final quarter of 2018, as the group is now producing the racks in Malaysia.

The group is the largest Malaysian steel rack manufacturer as its Eonmetall brandname has the largest market share in the country.

Yeoh said the group expected the revenue and bottom line for 2018 to improve significantly over 2017.

According to Yeoh, the global market for material handling business is expected to reach US$134.8bil by 2020 with Asia accounting for 38% of the market.

“Coupled with the existing ageing material handling systems and the enormous growth in e-business, more new distribution centres would create a huge demand for steel storage and racking requirements.

“The partnering will enable the group to supply a comprehensive range of static and dynamic storage racking solutions with a European certification.

“Presently, the steel storage business is the main contributor to the steel products and trading activity segment of the group,” he added.

The storage racking segment contributes 65% to the group’s revenue, while the machinery and equipment business generates 35%.

According to the Inkwood Research, the global material handling equipment market is estimated to grow at 6.53% compounded annual growth rate (CAGR) from 2018 to 2026.

In 2017, the group acquired a wholly owned subsidiary, Eonmetall Bio-Coal Sdn Bhd (formerly known as CSC Bio- Coal Sdn Bhd).

The company, with its available equipment and machinery, will facilitate the group’s aspiration to invest in the biomass industry for the manufacturing and distribution of bio-coal and biochar by utilising palm and other agricultural biomass.