SPECIALTY pole maker Mestron Holdings Bhd expects a strong rebound in its 4Q FY2021 performance amid the roll-out of Phase One of the National Digital Network (JENDELA) initiative that would require the construction of the 1,661 telecommunication towers nationwide.
This is compounded by the fact that the company has a strong presence in Sarawak, which alone requires 600 towers under the initiative.
Above all else, another pull factor is probably the long-delayed Sarawak state election, which has been fixed for Dec 18, after being suspended over two Emergency periods this year.
“Our strong presence in Sarawak gives us an advantage as we have a proven track record of delivering on our products and services,” Mestron’s managing director Por Teong Eng pointed out.
“This puts us in a good position to win more contracts for works related to the development of the telecommunication towers. We hope to get at least 30% (share) of these towers in Sarawak or about 180 towers.”
Mestron saw its 3Q FY2021 net profit slashed by two-third to RM1 mil for the quarter under review (3Q FY2020: RM3.09 mil) while its revenue dipped 25% to RM14.26 mil (3Q FY2020: RM19.07 mil) due to the impact from the full movement control order (MCO 3.0) that was imposed between June 1 and end-August.
For the 9M FY2021 period, Mestron’s net profit was down by 31.6% year-on-year (yoy) to RM2.65 mil (9M FY2020: RM3.87 mil) while its revenue declined by 3.1% yoy to RM36.9 mil (9M FY2020: RM38.04 mil).
Buoyed by the roll-out of the development of 5G network in Malaysia under the JENDELA initiative, Por expects Mestron’s outlook to remain positive with “massive earnings growth” over the next two years given the gross margin of around 25% for its specialty pole products.
Aside from that, Mestron is also looking beyond the manufacturing sector by diversifying into the renewable energy (RE) sector with the acquisition of Liziz Biogas Sdn Bhd for RM3 mil cash. This acquisition was announced in September 2021.
Liziz is involved in the generation of biogas electric energy. The venture into biogas is the group’s second venture into RE following its venture into solar power for the telco industry.
With the diversification into RE, Mestron has expanded its source of recurring income which would be vital to help drive long-term sustainable growth.
At the close of yesterday’s (Nov 26) trading, Mestron was down 0.5 sen or 1.54% to 32 sen with 6.61 million shares traded, thus valuing the company at RM298 mil. – Nov 27, 2021
