Malaysia’s Metrod Holdings To Invest Over MYR1.1 Billion In Selangor Copper Pant

© Nikkei Markets

KUALA LUMPUR (Feb 25) — Malaysia’s Metrod Holdings will invest over 1.1 billion ringgit ($270.24 million) in a new copper manufacturing plant in Selangor, its president said Monday. 

“The new plant will raise copper rod output capacity to over 300,000 metric tons per year,” Rajan Mittal said at the launch of the new facility. 

The copper rod manufacturer expects its total sales to double in the next three years with the launch of the new plant, he added. The unaudited total sales value for 2018 is about 2.5 billion ringgit, he said.

“I’m confident we’ll be able to double our sales in the next three years,” he said. 

– By Gan Pei Ling
– Edited by Sayantika Bhowal

Malaysia Fraser & Neave To Invest MYR30 Mln To Expand Capacity, Sugar Tax Looms-CEO

© Nikkei Markets

KUALA LUMPUR (Jan 23) — Malaysia’s Fraser & Neave Holdings will invest 30 million ringgit ($7.3 million) to expand production capacity as part of its capital expenditure program for this fiscal year that started Oct. 1, even as the beverage maker seeks to absorb higher cost due to a proposed sugar tax, its chief executive said Wednesday. 

“More than 90% of the existing products will be affected by the sugar tax,” Lim Yew Hoe said at a news conference. “Raising product prices will be our last resort.”

The company is exploring alternatives to sugar after Malaysia announced move to tax sugary drinks from April, Lim said. 

The company may offer its products in smaller pack size or reformulate some of its products to reduce the sugar content, he added. 

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay

Malaysia Top Glove Budgets MYR400 Million In Annual Capital Expenditure-Chairman

© Nikkei Markets

KUALA LUMPUR (Jan 08) — Malaysia’s Top Glove Corporation, the world’s largest rubber glove producer by capacity, has budgeted about 400 million ringgit ($97.3 million) in annual capital expenditure as it seeks to automate, digitize and modernize machineries among others, its chairman said Tuesday.

The planned expansion comes at a time when analysts have started flagging potential oversupply in the industry as companies such as Top Glove and close rival Hartalega Holdings rapidly ramped up capacity in the recent years.

“Industry demand for nitrile glove is growing at 10%-to-15% a year,” Lim Wee Chai told reporters after the company’s annual shareholders’ meeting. “We can meet customers’ demands.”

Malaysia is home to the world’s top four manufacturers that collectively account for an estimated 80% of the world’s supply of rubber gloves used in sectors ranging from healthcare to food preparations. As usage of the gloves gained pace, manufacturers steadily ramped up production and expanded capacity to cater to an increasing demand.

By December 2020, Malaysia’s largest manufacturers-which also include Kossan Rubber Industries and Supermax Corp-would have over 180 billion pieces in combined capacity. Top Glove alone expects to produce more than 70 billion gloves per annum by end of next year.

“We will continue to grow,” Lim said.

This year, total capacity at the top four glove-makers would increase by 15% compared to world demand growth of about 8%-10%, according to Hong Leong Investment Bank Analyst Sheikh Abdullah. “We do note that a short-term imbalance is expected to manifest in 2019,” he said.

“Our analysis suggests a potential oversupply is looming,” Kenanga Investment Bank’s Analyst Raymond Choo wrote in an investor note on Friday. An oversupply could weigh on average selling price, he cautioned.

Top Glove’s push for deeper automation at its factories to reduce reliance on manual work force also follows recent labor abuse allegations. The company has admitted breaching the legal working-hour limit in Malaysia but contests other allegations that included forced labor.

Profit margin at Top Glove could be under pressure this year in-part due to higher minimum wage in Malaysia, said JF Apex Securities analyst Siau Li Shen. That makes Top Glove’s push to increase efficiency crucial to cushion the margin erosion, he said.

Shares of Top Glove closed down 5.1% at 5.03 ringgit, meanwhile FBM KLCI ended down 0.4% lower at 1672.76.

– By Gan Pei Ling and Gho Chee Yuan;; +603-20267363
– Edited By Abhrajit Gangopadhyay

Malaysia Hiap Teck Joint Venture To Be Profitable If Current Steel Price Holds-Official

© Nikkei Markets

KUALA LUMPUR (Dec 17) — Malaysian steelmaker Hiap Teck Ventures expects its joint venture company Eastern Steel to be profitable if the price of steel slabs remains at the current level of $450/ton, its group executive director said Monday.

“We are operating at our full capacity of 700,000 tons per annum and have incurred positive cash flow,” Foo Kok Siew told reporters after its annual shareholders’ meeting in Selangor.

Hiap Teck Ventures was in the red from 2015 to 2017 after operations at the Eastern Steel were stalled. “Our downstream operations (trading and manufacturing) have always been profitable,” Foo added.

Eastern Steel’s furnace in Kemaman, Terengganu ceased production after steel slabs price dropped to $250/ton in 2015, thanks to the influx of cheap imports from China. It resumed production in July this year after the Chinese production capacities fell.

Foo said 60% of Eastern Steel’s production is exported to the neighboring countries mostly to the Philippines, Indonesia, Thailand and Taiwan.

– By Gan Pei Ling
– Edited by Sayantika Bhowal