CEO Morning Brief

Econframe Targets RM90 Mil Revenue in FY2023; 22% From Aluminium Glazing Business Segment

Publish date: Thu, 19 Jan 2023, 09:28 AM
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TheEdge CEO Morning Brief
Econframe targets RM90 mil revenue in FY2023; 22% from aluminium glazing business segment

KUALA LUMPUR (Jan 18): Econframe Bhd is targeting RM90 million in revenue for the financial year ending Aug 31, 2023 (FY2023), with about 22% of the revenue coming from the new acquisition of Lee & Yong Aluminium Sdn Bhd (LYASB).

Econframe managing director Lim Chin Horng said a total of RM70 million will come from its existing metal door and window frame business, while the remaining RM20 million will be contributed by LYASB.

The leading provider of total door system solutions for property development is acquiring a 65% stake in LYASB, which is mainly engaged in the manufacture and installation of aluminium glazing, glass products and facade works such as aluminium windows and glass doors for RM17.2 million.

This is the group’s first acquisition since its listing on the Bursa’s ACE Market in 2020, and is expected to be completed in the second half of this year.

“We expect an annual revenue of RM60 million to RM80 million in the next two years, while the profit guarantee is about RM12 million,” Lim told reporters at a press conference on Wednesday (Jan 18).

The acquisition of LYSAB is a good move for Econframe, Lim said, noting that aluminium is a compulsory component for windows and sliding doors. “For this reason, we need to tap into the market to continue serving our long-standing customers such as Mah Sing Group Bhd, IJM Corp Bhd and Sime Darby Bhd.”

Econframe currently has about 150 million to 200 million existing projects, with a total orderbook of about RM90 million, which will last for about a year and a half, said Lim, who holds 21.39% stake in the group.

“We are not on tie-down contracts, but on purchase orders. We will see new orders continue to come in,” he said.

The company’s earnings have shown an uptrend over the past three years. In FY2020, it recorded a net profit of RM1.3 million on revenue of RM15.4 million; in FY2021, a net profit of RM5.1 million on revenue of RM41 million; and in FY2022, a net profit of RM11.2 million on revenue of RM59.4 million.

Due to increased raw material and high operating costs, the company recorded a slight decline in net profit to RM2.33 million in the first quarter ended Nov 30, 2022 (1QFY2023), from RM2.66 million in 1QFY2022. In contrast, revenue climbed to RM16.9 million from RM13.3 million due to higher sales orders for metal frames.

“We are currently producing 35,000 to 36,000 units of metal door frames. I believe our capacity can increase to 40,000 to 50,000 units per month,” Lim added.

Econframe’s share price was trading down by 3.85% to RM1 at the time of writing on Wednesday, giving the ACE Market-listed group a market capitalisation of RM325.12 million. Over the past year, the stock has risen 100%.

Source: TheEdge - 19 Jan 2023

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