Daibochi’s performance to pick up in 2H after weak quarter
KUALA LUMPUR: Daibochi Plastic and Packaging Industry Bhd’s (Daibochi) second quarter of the financial year 2017 (2QFY17) results were dragged lower by soft er exports sales due to an operational hiccup in the Philippines.
However, analysts believe the group’s performance would pick up in the second half (2H) in the year, driven by positive contributions from Myanmar and from its customers in Indonesia.
MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) in a report, noted that the group’s 1HFY17 results were largely within expectations.
“We expect a stronger second half due to positive contribution coming from Myanmar as well as two MNC customers from Indonesia, which is expected to start contributing in 4QFY17,” it said, noting that that Daibochi Packaging (Myanmar) Co Ltd (DPM) has started operations since July 1, 2017.
Since the start of its operations in Myanmar, MIDF Research noted that the group it has been aggressively pursuing new contracts from food and beverage and fast moving consumer goods in Myanmar.
“DPM expects to start exporting to Daibochi’s price-sensitive customers in Malaysia in 3Q. On top of that, it is also looking at new beverage labelling business.
“These will contribute to the positive growth of DPM in FY17, which will also lead to stronger performance for Daibochi in the second half. Management targets 20 per cent revenue contribution from DPM by end 2018,” it said.
Meanwhile, on Daibochi’s 2QFY17 year-on-year (y-o-y) performance, the research team noted that the group’s revenue fell 10.5 per cent while its profit after tax fell 17.1 per cent.
“Revenue was lower at RM86.8m during the quarter compared to last year mainly due to an operational hiccup at a Philippines’ customer, which led to softer export sales.
“Due to the lower utilisation rate, operating expenditure margin increased, which led to the 17 per cent drop in net profit y-o-y to RM5 million,” it explained.
“We understand that this customer has resolved its problems and should have a normalised contribution going forward,” the research team noted.