PERAK-based Scanwolf Corp Bhd is upbeat that its plastic edging business will contribute positively to its financial year ending June 30, 2022 (FY6/2022), hence sustaining its double-digit revenue growth for the upcoming financial year.
This is mainly due to the revival of the residential construction market amid the global vaccination drive that will unleash a pent-up demand for furniture going forward.
“Scanwolf has an impeccable track record of over 25 years in the plastic edging business by providing a one-stop solution to furniture manufacturers,” commented Scanwolf’s executive director Ng Chee Wai.
“The strong recovery in the furniture industry will drive demand for our plastic edging business. Clients’ feedback and research conducted by our marketing team have shown that furniture orders in the near future continue to gain momentum.”
By early August, Scanwolf expects to complete its proposed rights issue of irredeemable convertible unsecured loan stocks (ICULS) with warrants which will help to raise funds for the expansion of the group’s production lines.
“The corporate exercise will raise a maximum of RM10.5 mil which will enable us to immediately add new production lines to increase our maximum capacity by 45% per month to capture the rising demand,” Ng pointed out.
Another catalyst that will drive furniture demand is the shift towards remote working which will drive consumer demand for furniture that is suited for the work-from-home (WFH) environment.
Aside from that, a diversification of orders from China to Malaysia by US importers amid the prolonged US-China trade war will also benefit furniture players in Malaysia.
“US importers that faced higher import duties for furniture imported from China have already been diversifying away from their reliance on Made-in-China products over the last year, hence benefitting regional manufacturers, including Malaysian companies,” observed Ng.
According to the Organisation for Economic Co-operation and Development (OECD), the US economy is expected to grow at the fastest pace since 1984, mainly due to its Government’s fiscal stimulus and the speedy roll-out of COVID-19 vaccines.
Meanwhile, the global economic recovery is also expected to play catch-up as more countries push for its vaccination drive. Developed countries leading in the roll-out of vaccination such as the UK have recently re-opened their economy by declaring “Freedom Day” on July 19 (although this has been marred by soaring cases and isolation chaos).
“While the resurgence of COVID-19 cases continues to pose downside risks to the reopening of the global economy, the effective vaccine rollout and pent-up solid demand as well as a diversification away from China will solidify Scanwolf’s position in FY2022, thus sustaining its double-digit revenue growth,” projected Ng.
At 9.10am, Scanwolf was down 0.5 sen or 1.33% to 37 sen with 72,900 shares traded, thus valuing the company at RM39 mil. – July 22, 2021