FIHB SEES SUSTAINED GROWTH
Company targets additional business income from construction arm and more overseas furniture fit-out jobs
FEDERAL International Holdings Bhd (FIHB), which has a construction order book worth RM243 million, expects to sustain business growth in the years ahead.
Managing director Datuk Choy Wai Hin said the company’s name change to Federal International was to reflect additional business income from its construction arm and better prospects of garnering overseas furniture fit-out jobs.
“In the next three to four years, we’ll see more profit contribution from our construction arm, Pembinaan Federal Sdn Bhd (PFSB).
“We’re now busy constructing a 20-storey building in Petaling Street, Kuala Lumpur, which is due for completion in March next year,” said Choy in an interview.
Also in the pipeline is a 27storey serviced condominium in Puchong, which is slated for completion in December next year.
Choy said PFSB is in the final stages of negotiating contracts worth RM415 million.
“We expect this new stream of contracts to contribute positively in the next financial year ending June 30 2020. So far, the profit margin from our construction arm ranges from seven to 12 per cent,” he said.
For many decades, FIHB has been making and exporting premium made-to-order furniture.
Locally, FIHB has undertaken interior fit-outs for five-star hotels such as St Regis KL, JW Marriott KL and The Ritz-Carlton KL.
The group also operates Kitchen Plus, Malaysia’s largest kitchen and appliance superstore.
Earlier this year, FIHB paid the Choy family RM27 million for the remaining 40 per cent stake in Pembinaan Masteron Sdn Bhd (PMSB). The company had bought a 60 per cent equity in PMSB for RM33 million two year ago.
“The full benefit of acquiring PMSB kicked in this year. We have since renamed it to PFSB and are booking in contracts worth RM300 million to RM500 million. My team in the construction arm would be busy for the next three to five years,” he says.
Choy said FIHB is now 35.4 per cent owned by his family.
FIHB, which was founded by Choy’s father, executive chairman Datuk Dr Choy Fook On, in 1962, is the sole approved vendor of store sets for the Starbucks Coffee chain in more than 10 countries in the Asia-Pacific region.
“We have two furniture factories. The one in Puchong fulfills export orders while that in Banting is designed to churn out chairs, tables and wood panelling to fit out 300 to 400 Starbucks outlets per year.
“We’ve learnt to be more selective in taking furniture fit-out jobs. We hope to strike gross profit margins of between 12 and 15 per cent,” he added.
Choy said FIHB does not have a dividend policy but has been rewarding shareholders periodically.
“In the year ended June 30 2017, FIHB rewarded shareholders 1.2 sen a share and preferential shares amounting to 0.3 sen a unit.
“For the year ended June 30 2018, the company declared dividend in specie. For every 50 shares, shareholders get one treasury share and redeemable secured loan stocks amounting to 0.3 sen per unit.
“So, for the current year ending next June 30, we hope to maintain similar payouts to shareholders,” said Choy.