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Wednesday, December 23, 2015

EG Industries invests RM30m in plant expansion to boost EMS sector

SUNGAI PETANI (Dec 23): EG Industries Bhd ( Valuation: 1.50, Fundamental: 1.10) plans to invest about RM30 million to expand its plant by 50% in order to boost its electronic manufacturing services (EMS) capacity including box-build sector.

"The new facility would be dedicated to plastic injection moulding operations which would expand our scope of EMS to include box-build, complementing its current expertise in printed circuit board assembly.

"The facility will accord us greater capacity to serve larger clientele, especially in undertaking end-to-end manufacturing from product design to final assembly," EG Industries group chief executive officer Alex Kang told reporters after its annual general meeting.

Earlier this month, the group announced it secured RM150 million box-build orders from Europe and anticipates a 20% growth to its revenue in the financial year ending June 30, 2016 (FY16).

He said the capital expenditure for the expansion including machinery acquisition would be funded from proceeds raised through the rights issue exercise that was recently completed.

The facility is expected to commence operations in the third quarter of FY16.

In its first quarter ended Sept 30, 2015 (1QFY16), EG Industries saw net profit fall by 33.35% to RM5.04 million from RM7.56 million, due to absence of a gain on disposal of other investments of RM6.7 million seen in 1QFY15.

The group said netting off the gain on disposal, its pre-tax profit grew about 5.2 times to RM5.34 million from RM1.03 million, mainly driven by a favourable product mix and enhanced operations efficiency.

However, its 1QFY16 revenue was down 1.45% at RM190.88 million from RM193.69 million in 1QFY15 due to a change of focus to high margin products.

At 12.29pm, EG Industries shares dipped one sen or 0.98% to RM1.01 with 983,300 shares changing hands for a market capitalisation of RM215.5 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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