Por Teong Eng
KUALA LUMPUR: Specialty steel pole manufacturer Mestron Holdings Bhd (Mestron) expects to benefit from the government’s push for 5G network convergence under the MyDigital initiative.
In a press release in conjunction with the release of its financial results for the financial year 2020 (FY20), Mestron managing director Por Teong Eng said: “With 2021 set to be a year of recovery for global economies including Malaysia, we believe that it would provide an improved and accommodative operating environment for Mestron.
“Following the government’s recently announced MyDigital initiative that seeks to roll out domestic 5G connectivity, the group expects to see a stronger demand for its specialty pole products such as high mast and telecommunication monopole that are necessary in the development of telecommunication infrastructures.
“A faster rollout of 5G network in Malaysia will be a positive catalyst for Mestron through higher revenue contribution from the telecommunication sector.
“In addition, we also expect to benefit from the government’s continuous initiative to replace street lights nationwide with Light Emitting Diode (LED) lighting units. Our trading segment, which supplies outdoor lighting products, also includes LED lights.”
Mestron ended its FY20 with a stronger bottom line performance as its profit before tax (PBT) increased by 103.3 per cent, on the back of higher gross profit and lower operating expenditure achieved through the group’s cost-control measures.
The group, which expects to benefit from the government’s push for 5G network convergence, announced that its PBT has improved to RM8.66 million in FY20 as compared to RM4.26 million in the corresponding financial year.
The higher PBT was also due to the absence of a one-off listing expenses of RM3.05 million incurred in FY19. The PBT adjusted for the one-off listing expenses would have been RM7.31 million for the cumulative financial quarter ended December 31, 2019.
Mestron recorded a total revenue of RM56.64 million in FY2020 as compared to RM68.98 million in FY2019. The lower turnover was predominantly due to the Covid-19 movement restrictions in its key operating markets that has delayed product delivery schedule and the subsequent recognition of revenue.
The Covid-19 impact on the group’s financial performance was largely confined to the second quarter of FY20, given that movement restrictions have been relaxed in subsequent quarters.
As a result, the quarterly revenue has returned to pre-Covid-19 levels in the third and fourth quarters of FY20, led by the sales of higher margin products such as decorative poles, specialty poles and outdoor lighting products.
It is noteworthy that the Malaysian government has begun introducing LED street lighting for all roads nationwide in stages since September 2019.
Por added that Mestron’s specialty pole and LED lighting products command higher margins and hence, would strengthen the Group’s bottom line. In FY20, Mestron posted a PBT margin of 15.3 per cent.
In 4Q20, the group’s revenue expanded by 18.8 per cent to RM18.6 million from RM15.7 million in the previous year corresponding quarter, led by the trading segment that saw higher demand for LED lighting units.
Meanwhile, PBT for the quarter rose sharply by 128.2 per cent to RM3.24 million as compared with a PBT of RM1.42 million recorded in 4Q19, owing to the sales of higher margin products such as decorative poles, specialty poles and outdoor lighting products.
“Despite the positive catalysts ahead for the group, we remain extra vigilant in ensuring our operational excellence. We will be further supported by our new recurring income stream following our venture into the engineering, procurement, construction and commissioning (“EPCC”) services for solar power systems,” said Por.
On December 18, 2020, Mestron via its wholly-owned Mestron Engineering Sdn Bhd inked a joint venture agreement with Samdo Smart Solar (M) Sdn Bhd to provide EPCC services for six solar power systems for telecommunication towers located in Peninsular and East Malaysia.
Mestron expects to benefit from the government’s push for 5G network convergence under the MyDigital initiative.
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