SPECIALTY pole maker Mestron Holdings Bhd has maintained its growth momentum in the first quarter of its financial year ended March 31, 2022 with its revenue spiking 84.1% year-on-year (yoy) to RM21.41 mil from RM11.63 mil in the corresponding period a year ago.
A filing with Bursa Malaysia today shows that the increase in revenue was in tandem with a surge in sales demand of standard poles and specialty poles led by the group’s telecommunication (telco) segment.
“We are proud of the growth momentum that we sustained during the quarter despite the challenging operating environment,” commented Mestron’s managing director Por Teong Eng.
“Given our capacity and capability to do telco poles and towers, this put us in a good position to tap on the strong demand in this space amid escalated government spending on telco infrastructure under the National Digital Network (Jendela) and 5G programmes.”
Despite the strong revenue growth, Mestron saw its net profit declined by 10.1% to RM1.38 mil in 1Q FY2022 from RM1.5 mil a year ago.
The stock exchange filing attributed the lower profit mainly to loss-making subsidiaries and fluctuations in the price of raw materials such as steel plates and steel pipes which fluctuates based on the global steel prices.
“The key challenges that we faced during the quarter were mainly due to the external uncertainty such as the Russia-Ukraine conflict and lockdown in China’s major cities due to the new wave of COVID-19 infections,” Por pointed out.
“While the group has taken proactive measures to maintain its profitability, we have seen an erosion in our margin during the quarter.”
Aside from that, the Bursa Malaysia filing further noted that the recent implementation of the new minimum wage standard in Malaysia would also result in higher operating costs for the manufacturing sector.
In this regard, Por shared that the group will exercise extra vigilance in its business by striving to deliver satisfactory performance for the year.
He added the group would explore other opportunities by looking to diversify its business to expand its sources of revenue by including other sources of recurring income as a source of its business income.
At 4.12pm, Mestron was unchanged at 32.5 sen with 5.14 million shares traded, thus valuing the company at RM302 mil. – May 27, 2022
