Kian Joo to invest RM90m in Myanmar

PETALING JAYA: Aluminium can manufacturer Kian Joo Can Factory Bhd, which is still open to any potential offers following the termination of a RM1.47 billion take over offer by Aspire Insight Sdn Bhd, is expanding into Myanmar with the construction of two plants there for US$23.5 million (RM90.79 million).
At a press conference after the company’s AGM here yesterday, Kian Joo CFO Ooi Teik Huat said he expects construction works at the Thilawa Special Economic Zone to kick start in the third quarter of the year and for it to be operational in 2017. The land cost is US$15 million.
“We intend to replicate what we have in Malaysia, basically we’ll have tin can, carton box manufacturing and contract packaging in Myanmar,” he noted.
The Myanmar operations are only expected to contribute positively to the company after four or five years. Production from the Myanmar plant will be mainly for the local market.
Currently Vietnam is the largest overseas market for Kian Joo, making up 30% of the company’s total revenue.
Ooi said the company is not in a hurry to make a cash call despite the huge investment outlay needed for the Myanmar plants, as it has sufficient internal funds and borrowings. It has close to RM200 million in cash.
Kian Joo had a record breaking year in 2015, with a net profit of RM131.31 million, up by 8.6% compared with RM120.91 million in 2014.
Ooi was non-committal on its performance for 2016 however, citing headwinds in the form of volatile currencies and commodity price movements.“What we can do is minimise the risk through currency and commodity hedging,” he said.
On another note, Ooi said the board is still “very open to offers”, after the Aspire Insight offer launched in 2013 fell through due to failure to agree on pricing.
“It is the duty of the board to look at any proposals as long as they come in the right format,” Ooi said.
Late last year, Toyota Tsusho Corp was said to have renewed interest in Kian Joo after its failed bid to acquire a 51% stake, despite a higher offer price of RM3.74 per share. Kian Joo had said it was in no position to consider Toyota Tsusho’s non-binding letter of interest.
Ooi said they are not in talks with any parties at the moment.