Mieco Chipboard receives shareholders' nod for particle board firm buy from SYF Resources

PUTRAJAYA: Mieco Chipboard Bhd, which has received shareholders’ approval for its proposed acquisition of Great Platform Sdn Bhd from its holding company SYF Resources Bhd for RM58.6 million, expects to achieve better earnings and revenue growth from next year onwards, supported by the contribution from its newly acquired entity.
Great Platform, which produces and trades particleboards and medium high-density fibre boards, operates two production plants in Negri Sembilan.
“With this new company joining us, we expect that our financial performance from financial year 2018 onwards to be even better,” Mieco’s executive director Keith Ng Wei Ping told reporters after its EGM today.
“We believe the new company will start contributing to the group’s revenue by the second quarter of next year,” he added.
Mieco’s earnings jumped more than three-fold to RM15.62 million in the third quarter ended Sept 30, 2017, against RM4.23 million a year ago driven by higher selling price and improved production efficiency.
Its revenue for the quarter rose 11.1% to RM101.13 million from RM91.03 million previously, mainly due to the continued strong selling prices from plainboard.
Furthermore, Ng said upon the completion of the proposed acquisition in the first quarter of 2018, the group’s annual production capacity will immediately increase by 20% to 1.08 million cubic meter (cu m), from 900,000 cu m currently.
He said the acquisition will also simultaneously increase the group’s market presence in the country by 10%. Mieco currently holds a 55% to 60% market share in the domestic market, making it the largest particle board manufacturer in Malaysia.
Commenting on its outlook, Ng said the group remains optimistic on its business going forward, despite anticipating market conditions to be more competitive and challenging due to the downward pricing pressure on its products.
“Currently the price of chipboard is coming down compared with the past six months, but we foresee that as a sudden market shock and we expect it won’t last for too long,” he said.
Asked whether the group has plans to diversify its business in the future, Ng reiterated that the group is not looking to venture into other business, but will focus to expand aggressively on its capacity and continuously exploring new markets.
At present, he said about 80% of the group’s production is sold to the local market, while the remaining 20% exported to overseas markets including the US, Japan, Europe, as well as Australia.
Mieco gained 7.06% to 91 sen today with some 6.87 million shares done.