SCH in talks to form JV in Cambodia

KUALA LUMPUR: Quarry machinery supplier SCH Group Bhd (SCH) is in negotiations to form a US$50,000 (RM178,000) joint venture (JV) with a local company in Cambodia to expand its distribution and supply of industrial products business there.
SCH is principally involved in the business of distribution and supplying of quarry industrial products, machinery, equipment and reconditioned quarry machinery, as well as the supply of its spare parts. It is also involved in the manufacturing and distribution of quarry grill.
"It (the talks) is still on-going now. Right now we are still going through the rules and regulations. We will try to set up everything and get registered, maybe by the third quarter of this year," its managing director and deputy chairman Lau Mong Ling told reporters after the group's AGM here yesterday.
Lau who declined to disclose the name of the company, revealed that the company is also involved in quarry equipment and machinery operations in Cambodia.
Besides Cambodia, the company also has a presence in Singapore, Indonesia, Myanmar, Vietnam and Thailand.
"It will take two years to grow the company there (Cambodia). After (it is) stable, we plan to go to Myanmar, to set up a warehouse and office there," he added, noting that SCH will contribute 51% (US$25,500) for the JV, while its JV partner will contribute the remaining 49% (US$24,500).
Lau added that its business expansion in Cambodia will help it to achieve its target markets and expand its reach in the Southeast Asia region, in which as at January 2014, SCH has an estimated 17.5% share in the local quarry equipment and machinery market.
The group's net profit for the first quarter (Q1) ended Nov 30, 2014 was up by 51% to RM4.46 million from RM2.2 million a year ago, mainly due to higher sales of high value machineries. Its revenue for the same quarter also has increased 16.4% to RM18.63 million against RM16.01 million last year.
For financial year ended Aug 31, 2014 (FY14), SCH reported a net profit of RM7.19 million on revenue of RM65.42 million.
The group expects to see at least 6.8% growth in its revenue for FY15, as per its revenue growth in FY14, driven by the company's quarry business which is supplemented by a pick up in the construction industry.
"The economic position is on the down trend, so it all depends on that part too. Those are not within the control of the company. But we hope we can at least maintain what we have achieved (for FY14)," the group's chairman Chan Wan Choon said.
Its supply of quarry industrial product business contributed 50.52% of the group's total revenue for FY14, while supply of both new and reconditioned quarry machinery and quarry equipment contributed 24.06%.
Historically, SCH has seen revenue grow 10% every year, consistent with the growth in the construction industry, which is about 10% to 12%.
Moving forward, Chan expects 2015 will be a challenging year for the company, in view of cautious consumer sentiment with the implementation of Goods & Services Tax in April this year.
"Given the depreciating of ringgit, we are also having concern on that. But we remain positive and hope to achieve at least the good results we have already achieved last year," he added.