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Saturday, June 18, 2016

Ajiya on investors’ radar screen

Saturday, 18 June 2016
Ajiya on investors’ radar screen

Group is turning into integrated green building solutions provider

THE growing interest in safety glass and metal roll manufacturer Ajiya Bhd is not without reason; the company appears to be metamorphosing from simply being a metal-roll forming manufacturer to become an integrated green building solutions provider.

Ajiya’s share price has appreciated by 54.21% over a one-year period to its current price of RM3.77. On a year-to-date basis, the stock is down 14.21%, although buying activity recently picked up. There was significantly more buying interest, perhaps partially due to its share split exercise.

Investors are starting to relook at Ajiya due to its ability to build affordable homes both on a low-cost basis and with a quick turnaround time. Becoming more obvious is the fact that any project involving affordable housing will likely require an unconventional way of building homes.

For Ajiya, this lies in its new value offering via the Ajiya’s Green Integrated System (AGIBS), which is an eco-friendly and fast-paced way of constructing houses.

In conventional construction, a house typically takes 24 months to complete. With the AGIBs method, this 24 months is significantly reduced to eight months. Furthermore, the cost to construct a single house is only RM80,000 and can be reduced with economies of scale.

Chan: What we are providing is a solution for an entire and complete house.

“The initial target is eight months. Eventually, we plan to bring this down to six months and then four months. The construction of the house, from ground clearing to a complete house, in fact takes only 30 days. The delivery times, construction and labour cost will be tremendously reduced,” says Ajiya managing director Datuk Chan Wah Kiang.

He considers the AGIBS system as a way which will eventually revolutionise house building and property development.

“What we are providing is a solution for an entire and complete house. For simplicity, think of the IKEA concept. Everything is already standardised, in boxes and bundles. The cost is not high, and it is fast because the material and cost are already predetermined,” explains Chan.

He says the beauty of the system is that it is fast and easy to install. It reduces the usage of heavy machinery, where welding is not required and site clearing cost is also reduced.

Ajiya’s AGIBS system comprises of its eight series of housing components which can be used to design, detail and manufacture steel frames for both the residential and light commercial markets.

The eight-series component systems consists of lightweight steel wall framing with wet wall system, metal door and window frames, composite floor decking, metal ceilings, sunshades, lightweight truss system, metal roofing, and safety glass with aluminium sash.

“Our target for Ajiya is to become the very first one-stop manufacturer that can provide affordable, fast and an efficient integrated building solution for Malaysia and South-East Asia,” says Chan.

On its core business, Ajiya has solidified its position as a leading metal-roll forming and safety-glass processing company in Malaysia and Thailand. Historically, Ajiya started off as a metal-roll forming manufacturer in 1990 under the brand name Ajiya. In 1996, the group ventured into the production of high-value-added safety glass products. The company’s products cater to a wide variety of users from industrial commercial buildings to the common residential houses.

From its core manufacturing base in Segamat, Johor, Ajiya has expanded its geographical footprint in the northern, southern, central and east coast of Malaysia. In 2007, Ajiya established its overseas presence in Thailand.

To date, the company holds a network of 19 factories and warehouses with offices throughout Malaysia and Thailand.

Government push

There is currently a government push for affordable housing projects, where this initiative is being championed by Syarikat Perumahan Negara Bhd and 1Malaysia People’s Housing Scheme (PR1MA).

Now for the PR1MA project, what is for certain is that 10,000 houses need to be delivered by this year.

During the tabling of Budget 2016 in October last year, Prime Minister Datuk Seri Najib Tun Razak announced the Government’s commitment to build 351,500 housing units through various agencies as part of efforts to address the issue of home ownership and affordability pressure in Malaysia.

Among these is a plan to construct 175,000 housing units under the PR1MA scheme in 2016, and the Government has already allocated RM1.6bil for this initiative. Targeted at middle-income earners, who are first-time homebuyers, PR1MA housing units will be sold at 20% below market price.

So far, 200,000 homes have already been approved for middle-income earners nationwide under the scheme.

Nonetheless, not one to rest on its laurels, Ajiya recently signed an MoU with an Indonesian party where its subsidiary Asia Roofing Industries Sdn Bhd is working with PT Baja Bahana Utama (BBU) to collaborate and explore potential business opportunities in the Indonesian market.

Both parties will set up a joint-venture company in Indonesia for the purpose of manufacturing and sales of Ajiya metal-roll formed products, more specifically Ajiya Green Intergrated Building Solutions, subject to the condition that the purchase volume of Ajiya Wall Frame by BBU reaches 200 tonnes per month.

For its first quarter ended Feb 2016, Ajiya’s net profit dropped 33.14% to RM3.1mil on the back of a 10.71% reduction in revenue to RM93.64mil. Its cash balances increased to RM72.76mil from RM33.35mil in the same period of the previous year.

For the financial year ended Nov 30, 2015, it recorded a 42.62% jump in net profit to RM21.95mil, on the back of 3.44% rise in revenue to RM426.65mil.

Last month, Ajiya proposed a series of corporate exercises, including a share split involving the subdivision of every one existing ordinary share of RM1 each in the company into four ordinary shares of 25 sen each.

It also proposed a bonus issue of 152.29 million warrants on the basis of one warrant for every two subdivided shares held by entitled shareholders, and an employees share option scheme of up to 10% of its issued and paid-up capital.

The proposed share split is expected to improve the trading liquidity of Ajiya after making the shares more affordable to appeal to a wider group of investors.

At Ajiya’s current share price of RM3.77, the stock has a market capitalisation of RM287.83mil which comprises 76.15 million shares.

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