Daibochi wraps up FY20 with RM47.7m net profit
Highest ever full-year earnings as demand for flexible plastic packaging remains resilient
PETALING JAYA: Daibochi Bhd posted a net profit of RM11.23 million for its fourth quarter ended July 31, 2020, while its revenue for the period stood at RM155.77 million, as the regional and domestic demand for flexible plastic packaging (FPP) from the food & beverage and fast moving consumer goods (FMCG) sectors remained resilient.
For the full year, the group posted its highest-ever net profit of RM47.7 million on RM619.3 million revenue.
For the quarter and the cumulative period, there were no comparative figures disclosed following the change in the financial year end from Dec 31 to July 31, 2020.
For the financial year, the group has proposed a final dividend of 3 sen per share payable on Jan 15, 2021.
Previously, it had paid an interim dividend of 2 sen per share which amounts a total dividend of 5 sen per share for the year with a total payout of RM16.4 million representing, 34.3% of its net profits.
In its Bursa disclosure, the group stated that it will continue to expand its production capacity, capabilities, and efficiency, as well as to pursue more growth opportunities in the expanding food, beverage, and fast-moving consumer goods sectors regionally.
Daibochi’s executive director, Low Jin Wei, commented that its strong performance for the financial year reflects the group’s exposure to essential consumer goods such as food and other staples, which remain high in demand despite Covid-19’s impact on global consumer sentiment.
“Riding on this, we have committed to and are making good progress in our RM100 million capex spanning a two-year period from FY2020 to the financial year ending July 31 2021, involving the purchase of new machines which would boost our annual production capacity by about 60%,” he said in a press release.
Low noted that the capacity expansion would support its commitment to target more opportunities across Southeast Asia and Oceania, and reinforce its position as a provider of flexible packaging solutions to major domestic and global brands.
Of the total RM100 million in capex, RM60 million is allocated for purchasing 13 machines spanning the printing, lamination, and bagging processes. Of these, seven machines were commissioned in the second half of FY20, and six machines are expected to be commissioned in FY21.
Daibochi has allocated an additional RM40 million in FY21 for eight more machines, which would bring expanded capacity to 60% in total, with four machines already contracted to date. The group will maintain its net gearing level below the 0.5x mark.
On outlook, the executive director commented that its prospects are bolstered by increasing demand for sustainable packaging solutions by multinational companies and other prominent brands in Malaysia and regionally, in line with global sustainability trends.
“Our joint research and development prowess with Scientex positions us strongly to capture more opportunities in this nascent but promising area, and we are looking to commercialize more sustainable solutions with our clients in the near future,” he said.