Por Teong Eng
KUALA LUMPUR: Mestron Holdings Bhd (Mestron) maintained its profitability during the third quarter of its financial year 2021 (3QFY21) despite the impact from the Movement Control Order 3.0 (MCO 3.0).
Going forward, Mestron says it is confident that the reopening of the economy and rollout of the Jalinan Digital Negara (Jendela) initiatives would drive its earnings growth.
For 3QFY21, the group’s net profit was down by 67.5 per cent year-on-year (y-o-y) to RM1.0 million as compared to RM3.1 million in the corresponding quarter a year ago. The lower net profit is in line with the decrease of 25.2 per cent y-o-y in its revenue to RM14.3 million in 3QFY2021 from RM19.1 million in 3QFY20.
The enforcement of MCO 3.0 and NPR has led to delay in scheduled deliveries of its products for the manufacturing sector, which has led to lower revenue and earnings during the quarter.
The group’s revenue was principally derived from the manufacturing sector, which accounts for about 84.4 per cent of the total revenue for the 3QFY21. The Malaysian market remains the largest market contributing to the group’s revenue, accounting for about 91.5 per cent of the total revenue during the quarter.
Mestron managing director Por Teong Eng said, “The results in this quarter was mainly impacted by the enforcement of MCO 3.0 and NRP, where the group was only able to resume its operations on 22nd August 2021. Going forward, we are confident that the reopening of the economy and rollout of the Jendela initiatives would drive our earnings growth.”
Under the Phase One of the Jendela initiative, a total of 1,661 telecommunication towers will be constructed, and Sarawak alone would require the construction of 600 towers under the plan.
“Our strong presence in Sarawak gives us an advantage as we have a proven track record of delivering on our products and services. This puts us in a good position to win more contracts for works related to the development of the telecommunication towers. We hope to get at least 30 per cent (share) of these towers in Sarawak or about 180 towers.”
With the rollout of the development of 5G network in Malaysia under Jendela, Mestron’s outlook remains positive and could see “massive earnings growth” over the next two years, given the gross margin of around 25 per cent for the specialty pole products.
Aside from that, Mestron is also looking beyond the manufacturing sector and will diversify into the renewable energy (RE) sector with the acquisition of Liziz Biogas Sdn Bhd for RM3 million cash. This acquisition was announced in September 2021.
Liziz is involved in the generation of biogas electric energy. The venture into biogas is the group’s second venture into RE following its venture into solar power for the telco industry. With the diversification into RE, Mestron has expanded its source of recurring income, which would be vital to help drive long-term sustainable growth.
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