JOHORE Tin Bhd has obtained approval from shareholders attending its recent annual general meeting (AGM) to change its name to Able Global Bhd to better reflect the company’s strength in the food & beverage (F&B) segment.
Such is a timely move as the company derives circa 75% of its earnings from F&B segment through manufacturing and trading of dairies products
Hosting an analyst briefing, Johore Tin said there has been improvement in sales order although its manufacturing operations have been temporarily strained by reduced workforce during the current full movement control order (FMCO) period.
“Johore Tin’s Malaysian tin manufacturing and dairies manufacturing plants remained operational albeit with a reduced workforce of 60%,” justified analyst Jeff Lye Zhen Xiong in a company update.
“As a result, productivity of its plants is expected to be lower during the period despite efforts to prioritise usage of faster and more efficient equipment.”
However, the company’s sales visibility has improved with more orders from Africa and countries with less stringent movement restrictions.
“We understand that some customers, specifically from African countries, took a wait-and-see stance on procurement previously when freight charges surged abruptly,” noted TA Securities Research. “However, they have now begun placing new orders as their inventory levels have started running low.”
In the meantime, the tin packaging and condensed milk lines in Johore Tin’s Mexican joint venture (JV) plant is now operational and has commercialised production with small output produced for domestic sales in Mexico.
The commissioning efforts have now been shifted towards the evaporated milk line which is expected to be completed within one to two months.
“Prospects for the Mexican operations remains exciting, given its geographical advantage being in the Americas region, able to provide cost advantage in terms of logistics arrangements than exporting from Malaysia,” justified analyst PublicInvest Research analyst Wong Ling Ling.
“Furthermore, one of JTB’s JV partner Calkins, Burke and Zannie de Mexico, S.A. de C.V. (CBZ) has readily available distribution network in the US which is one of the largest dairy markets globally.”
Moreover, the group has engaged relevant authorities to start the process of obtaining manufacturing quality certifications such as HACCP and FSSC 22000 which are often the requirements imposed to start selling to export markets on a big scale.
Hopeful to receive the necessary certifications by end-2021, Johore Tin plans to ramp up production for exports to countries in Central America and South America alongside the US.
TA Securities Research maintains its “buy” call on Johore Tin with an unchanged target price of RM2.30 while PublicInvest Research retained its “outperform” rating on Johore Tin with an unchanged sum-of-parts (SOP)-based target price of RM2.25.
At 11.15am, Johore Tin was up 3 sen or 2.03% with 12,300 shares traded, thus valuing the company at RM469 mil. – June 30, 2021
