Superlon to boost production capacity
KUCHING: Superlon Holdings Bhd (Superlon) is poised to boost its production capacity by 30 per cent to meet increasing demand from customers.
The research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) in a report yesterday said the company is building a new warehouse and its completion is on track to provide additional 70,000 square feet of floor space to its manufacturing plant.
The research firm believed that the new warehouse will ease up the current production bottleneck at the company’s existing manufacturing plant.
It projected that the new warehouse is expected to increase the company’s production capacity by 30 per cent.
Besides, the research firm opined that Superlon could further optimise its operations layout and efficiency with the additional floor space.
Likewise, MIDF Research estimated that the full-year earnings impact from the new facility will be recognised in the company’s accounts in financial year 2018 (FY18) ending April 2018.
Meanwhile, Superlon told Bursa Malaysia last Thursday that its net profit for the second quarter of financial year 2017 (2QFY17) ended October 2016 grew by five per cent year- on-year ( y- o-y) to RM5.04 million.
The company added 2QFY17 revenue remained flat at RM22.29 million from RM22.35 million registered in 2QFY16 ended October 2015.
For the first half of financial year 2017 (1HFY17), Superlon said revenue gained by 7.8 per cent y- o-y to RM47.92 million while net profit increased by 28.2 per cent y- o-y to RM11.09 million.
MIDF Research said Superlon’s 1HFY17 net profit of RM11.09 million was within its expectation, making up 58 per cent of its earnings forecast for FY17 ending April 2017.
Going foreward, the research firm expects Superlon’s financial results for the coming quarter ending January 2017 to be slightly softer as installation jobs for thermal insulation slows down during the raining season.
Nonetheless, it opined that Superlon’s wide geographical presence will cushion any slowdown in any one of the company’s particular market.
The research firm noted that Superlon’s net profit for 2QFY17 climbed by five per cent due to better profit margins from its manufacturing division.
Elaborating further, it observed that the improved profit margins were attributed to lower material costs.
Hence, MIDF Research was positive on the company’s latest financial results and is confident that Superlon can meet its earnings forecast for FY17.