PERAK-based Scanwolf Corp Bhd is eyeing a turnaround in its final quarter ended June 30, 2021 (4Q FY6/2021), driven by its newly-commenced plastic film manufacturing business and the capacity-maximised plastic edging division.
Interestingly, the COVID-19 pandemic has boosted demand for furniture products, notably bedroom set, panel-based office suites and dinette sets which see healthy growth as more people are working from home.
“Another advantage to us is the diversion of orders from China to Malaysia due to the US-China trade war,” commented Scanwolf Corp’s executive director Ng Chee Wai.
“This also bodes well for our plastic edging division as we supply to major furniture manufacturers such as Versalink Holdings Ltd, Poh Huat Resources Holdings Bhd, Signature International Bhd, Lii Henn Industries Bhd, Tafi Industries Bhd and other non-listed companies.”
As of 2Q 2021, Scanwolf Corp’s plastic edging division is operating at a maximum capacity of 300 metric tonne (MT)/month with a total backlog of 400 MT as of Dec 31, 2020.
“It is imperative for us to add new production lines to produce plastic edging for the furniture industry, which would then increase the maximum capacity to 440 MT per month,” Ng pointed out.
In a related development, the company is in the midst of completing its proposed rights issue of irredeemable convertible unsecured loan stocks (ICULS) with warrants which aims to raise RM10.5 mil under the maximum scenario.
This augurs well for the group’s expansion plan as the booming demand for furniture shows no sign of slowing down.
The gradual re-opening of the economy in the developed markets has driven a pent-up demand in various sectors, including furniture goods which will continue to drive demand for the plastic edging division.
Moreover, Scanwolf Corp’s newly-commenced plastic film manufacturing business in March 2021 has also gained traction with overwhelming inquiries from potential customers. The company will focus on providing packaging solutions to higher-margin industries such as pharmaceutical and food & beverage (F&B).
“We planned to install a total of three production lines with an initial production capacity of circa 3,576 MT of plastic firms per annum,” projected Ng.
“While one line has commenced operations, we expect the other two lines to start operation by September and December this year respectively. The delay is mainly due to the disruption of works by contractors as a result of ongoing COVID-19 pandemic.”
Upon running at full capacity, the total three production lines are expected to generate a revenue of RM2.4 mil per month.
“We plan to utilise RM800,000 of the proceeds raised from our rights issue exercise to add one unit of PVC calendar six-roller with the latest automation features. This would then increase the maximum production capacity to 4,896 MT per annum from the current 3,576 MT per annum,” added Ng.
At the close of this morning’s trading session, Scanwolf Corp was up 0.5 sen or 1.61% to 154,100 shares, thus valuing the company at RM33 mil. – June 15, 2021