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Monday, June 10, 2013

CEO: Pelikan in no hurry to woo investors


PETALING JAYA: Stationery maker Pelikan International Corp Bhd, which is in the midst of a restructuring aimed at nudging it towards profitability, is in no hurry to woo investors until it gets itself on the “right footing”, said chief executive officer Loo Hooi Keat.

Loo was responding to queries from StarBiz on how analysts ceasing coverage on the counter would impact the company.

CIMB Research in a recent note said it would cease coverage on the company due to a lack of institutional interest in the stock and the company's failure to show signs of a turnaround after making losses for two consecutive years.

The company was still in the red in its latest quarterly result, reporting a loss of RM9.2mil on the back of RM328.8mil in revenue.

The brokerage added that the company faced strong challenges, as 85% of its revenue was contributed by the European market, a region which had experienced a shrinking economy for six straight quarters. It said Europe's gross domestic product declined 0.2% in the first quarter of 2013 and was down 0.6% in the fourth quarter of 2012.

Commenting on business prospects, Loo said: “Pelikan is still the No. 1 brand in Germany and a strong brand regionally.”

He said Germany, a segment which represented 52.5% of its first-quarter revenue, was doing better currently, as business confidence improved.

Loo said he expected better prospects going forward, as it completes its restructuring exercise by year-end. “In fact, our operational margins are improving.”

Pelikan's restructuring efforts included taking loss-cutting measures and carrying out small pockets of sales, he said.

He explained that the company's performance was dragged down by Germany-based stationery company Herlitz AG, a unit it acquired in 2010.

Based on the closing price of 56 sen versus a net tangible asset per share of RM1.01 as at March 31, it has an implied price-to-book of 0.55 times.

The company said in a filing with Bursa Malaysia that its revenue for the first quarter ended March 31 dropped 21.3% to RM328.8mil from RM417.5mil a year earlier mainly due to the divestment of its business and product rationalisations to eliminate low-margin products.

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