2015年4月18日星期六

LCTH (5092) - LCTH plans to spend RM65m capital expenditure

1)

April 13, 2015 : 10:20 AM MYT   

KUALA LUMPUR: Precision plastic injection mould manufacturer LCTH Corp Bhd  has plans to spend up to RM65 million in capital expenditure this year as it aims to secure more manufacturing orders.

The Johor-based firm, whose customers include Hewlett Packard (HP), Bose Corp, International Business Machines (IBM) and Dyson Ltd, is looking to obtain more orders from its existing customers as well as new ones.

“We are trying to get more projects from them (existing customers). We are also looking for new customers,” LCTH’s managing director Hew Lien Lee told The Edge Financial Daily.

LCTH (fundamental: 2.5; valuation: 1.2) currently operates two manufacturing plants with one new plant in Johor and the other in Penang.

Incorporated in 2003, LCTH has two wholly-owned subsidiaries — Penang-based Fu Hao Manufacturing (M) Sdn Bhd and Johor-based Classic Advantage Sdn Bhd. The two subsidiaries are engaged in the manufacturing and sub-assembly of precision plastic parts and components as well as fabrication of precision moulds and dies.

The company also has a 40% stake in Berry Plastic Malaysia Sdn Bhd, which is principally involved in the manufacturing and assembly of precision plastic moulded products for electrical, electronics, healthcare, food and petroleum industries.

In a phone interview, Hew said the company is in talks with the Penang state government to buy land for manufacturing expansion, though discussions are still at a preliminary stage.

According to Hew, the move to buy the land is necessary as the Fu Hao plant is already operating at peak capacity.

Assuming the state government approves the land buy, the total investment cost could amount to RM30 million to RM40 million, inclusive of building the plant, said Hew.

In Johor, Hew said LCTH still has surrounding land to build another plant.

“We still have land in excess of three acres (1.214ha) to utilise,” he said, noting that this gives it the advantage to build immediately if demand increases. A new plant can cost it RM15 million-RM20 million.

Hew is optimistic the firm may source more orders this year from multinational companies (MNCs) as some are relocating here from China due to escalating costs there.

“We still see some growth in Penang because of more MNCs setting up plants there. Just last year, Bose held its opening ceremony [at its plant] in Batu Kawan . HP also intends to move some of its businesses to Johor from China. We will try to capitalise on that move,” he added.

Hew said LCTH intends to buy new injection moulding and tooling machineries as part of the company’s renewal process, which could amount to RM3 million to RM5 million.

“Whenever we make money, we will try to renew both injection moulding and tool-making machines just to stay ahead of the competition,” he said.

With the significant capex spend it is looking at, it is fortunate that LCTH is flush with cash. As at Dec 31, 2014, the company net cash stood at RM73.8 million.

“The reason why we have survived all this while is because we have a healthy cash flow,” said Hew.

For the quarter ended Dec 31, 2014 (4QFY14), LCTH’s net profit went up more than 10 times to RM5.95 million from RM438,000 a year ago, mainly due to its focus on higher margin projects with lower costs as a result of the right-sizing exercises.

For the full FY14, however, its net profit slipped 18% to RM12.9 million from RM15.8 million in the previous year — due mainly to the one off gain on disposal of property, plant and equipment in year FY13.

Excluding this one-off gain in the year 2013, the group achieved better performance in terms of profitability in FY14 compared with FY13, the company noted in its latest results filing.

LCTH closed down half sen to 42 sen last Friday — which is still up a whopping 86.7% compared with 22.5 sen on Dec 15 last year. The latest price gives it a market capitalisation of RM151.2 million.

On the share price hike, Hew said: “The investing public is reacting to our improved financial results. I believe shareholders are happy to see the share price gain.”

http://www.theedgemarkets.com
2)LCTH Corporation Bhd (Rm 0.42)

LCTH failed to reach the 48 sens level for its sub-wave v. Now that sub-wave v is completed, the current correction can either be the sub-wave vi, is almost there, 


Or it is a higher degree wave (ii) correction.