Chin Hin acquires Mi Polymer for RM35m

KUALA LUMPUR: Building material player Chin Hin Group Bhd, which is targeting a double-digit growth in earnings for 2017, is looking to expand its sewerage solution business into Southeast Asian countries following a RM35 million deal to acquire a polymer concrete pipe manufacturer.
Yesterday, the company announced the buyout of Mi Polymer Concrete Pipes Sdn Bhd in a bid to position itself as Southeast Asia's first and only integrated sewerage specialist with a full range of sewage solutions.
With the upcoming larger capacity, Chin Hin group managing director Chiau Haw Choon said the company is ready to participate in sewerage infrastructure projects in Malaysia and Southeast Asia, particularly Indonesia, the Philippines and Myanmar to supply sewerage solutions.
"We don't tender for projects directly, but it will be done through our main contractors. Then we'll get the job," he told reporters after the signing ceremony yesterday.
Chiau said the acquisition will give the company a competitive edge with a wider range of products offered.
"Before this, we did not have pipes smaller than 450mm, but with the acquisition of Mi Polymer, it will provide the missing link and position us as a one-stop supplier for our customers," he said.
Mi Polymer, whose net profit leapt by close to threefold to RM7.4 million in FY16 from RM2.6 million FY15, comes with a profit guarantee of RM6 million for FY17. The acquisition will be financed by internally generated funds.
The company, which has a RM10 million order book in hand, has started the construction of its second factory in Batu Pahat, Johor, which is slated for completion by the end of the year. Upon completion, its production capacity will be doubled from 20,000 to 40,000 metric tonnes per year.
Judging from the budgeted capital expenditure of at least US$12.4 billion (RM54.8 billion) for sewage infrastructure in the Southeast Asian region, Chiau believes there will be a huge market demand for sewerage pipes going forward.
"In Malaysia, the government has also allocated RM9 billion under the National Sewerage Project, of which RM510 million is earmarked in 2017 alone. This is our immediate target market, leveraging on the geographical proximity," he explained.
Chin Hin has an outstanding manufacturing order book of RM300 million, which is supported by rising demand for affordable housing as well as the government spending on sewerage infrastructure.
The company reported a 48.3% rise in net profit to RM44.8 million in 2016 against RM30.22 million in 2015.
He said Chin Hin does not have plans to raise funds at the moment. As at end-December 2016, its cash and cash equivalent stood at RM67.35 million.