KUALA LUMPUR (Oct 9): BSL Corp Bhd, which is in the stamping and manufacturing of metal parts, intends to move into contract manufacturing as part of its new strategy for future growth and to turn the company around.
The group’s chief executive officer Richard Ngiam Tee Yee said the group will be targeting Western-based clients for future growth.
“We were set up to support multi-national companies (MNCs) clients here in Malaysia. We have been dependent on Japanese based clients since the 90s, such as Panasonic and Yahama, as we were in the business of supplying components.
"Now, we want to evolve into becoming a contract manufacturer,” Ngiam told the media, after the group’s extraordinary general meeting (EGM) today.
BSL was in the red for nine straight quarters between 2013 and 2015, before returning to black in its latest third quarter ended May 31, 2015 (3QFY15), when it made a profit before tax of RM75,000, which left it with a net profit of RM2,000.
As at May 31, it has a cash and bank balance of RM19.16 million, with reserves amounting to RM17.41 million. According to its annual report dated Aug 31, 2014, it has retained earnings of RM20.71 million at the group level, versus RM1.84 million at the company level.
Ngiam admitted today that the group's order books have not been performing well for the past few years, mainly due to their Japanese clients' under-performance in the traditional electronic business.
"[But] recently, our orders have been stabilising due to demand from our European clients," Ngiam said.
He added that the group has seen some progress, since it centralised its manufacturing factories into one location in Rawang.
“[The centralisation] was to enable our contract manufacturing business model to be competitive, which we hope will attract our clients to give us complete assembly jobs,” Ngiam added.
Ngiam said with the centralization, the group has managed to trim its operating cost and reduce overheads.
Meanwhile, due to the current exchange rate, Ngiam said the group’s traditional business of producing and supplying components, as well as printed circuit board (PCB) assembly, could see a 10% to 20% improvement in orders for FY16.
“With the weakening of the ringgit, we are seeing orders increasing. It is positive for us, as our clients mostly export,” Ngiam noted.
The group's EGM sought the consent of shareholders today to appoint Messrs Mazars as auditors, in replacement of Messrs Deloitte. The proposed change of auditors received full support from its shareholders.
At 3.34pm today, BSL Corp (fundamental: 0.95; valuation: 0.9) traded 0.5 sen or 2.38% lower at 20.5 sen, with 57,000 shares traded.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)