Samchem to tap into Myanmar, Laos

SHAH ALAM: Chemical products distributor Samchem Holdings Bhd is looking to expand into Myanmar and Laos within the next three to five years to complete its presence within the Indo China region.
Its CEO Datuk Ng Lian Poh (pix) said there is a huge growth potential within the Indo China region, in particular Vietnam.
"It's enough for us in the next few years…we localize the business there, it's not a one or two years thing, you need three to five years to realise it and for a proper establishment," he told SunBiz in a recent interview.
Ng expects revenue contribution from both local and overseas markets to reach a ratio of 50:50 in 2015.
"Our overseas presence is enough for us for the next few years, it's a big population and big area to cover, so this is our focus, but it doesn't mean that Malaysia's volume shrinks, it's parallel," he said.
Samchem distributes a wide range of chemicals, such as polyurethane chemicals, intermediate chemicals, specialty chemicals and blends of customised solvents. It has distribution rights for 450 to 500 products.
While Ng acknowledged that there will be a short-term setback in the local business due to the goods and services tax (GST) implementation and possibly slower economic growth, he believes the second half of the year will perform better.
"Before GST, it (the orders) has slowed down a bit, but not much," he explained.
When asked of changes in products prices post-GST, he said it won't affect the whole range of products as some are zero-rated.
Due to the increased competition, he said the group has to be more efficient, but he noted that transportation costs have come down due to the slump in global oil prices.
Ng believes 2015 will be a good year for Samchem on the back of a stable political situation in its operating markets.
"For the past few years, we have spending a lot on the infrastructure, it's time for it to bear fruit," he noted.
For the financial year ended December 31, Samchem's net profit dipped 28.44% to RM6.25 million from RM8.74 million, mainly due to the gain on disposal of land of RM1.87 million a year earlier as well as higher costs from losses on foreign exchange and provision for doubtful debts in the current financial year.
"Our priority (for the overseas markets) is on our own expansion plans," he added.
Ng said the group has no intention to raise more funds for the time being unless there are huge expansion plans.
"If have some new distribution rights where a huge fund is required, then we'll raise more funds," he noted.
Shares of Samchem have been lackluster since its listing in the local bourse in June 2009. It closed unchanged at 69 sen on Friday, which is almost 3% lower than its initial public offering (IPO) price of 71 sen.
As at end-September 2014, Samchem's net assets per share stood at 82 sen.
Its chairman Ng Thin Poh is the single largest shareholder of Samchem, with a direct stake of 43.79%.