Pantech banks on manufacturing for further growth
Posted on January 17, 2012, Tuesday
MAKING PROGRESS: Photo shows Pantech’s steel pipe products. The company is expected to improve its earnings in the fourth quarter of financial year 2012.
KUCHING: Pantech Group Holdings Bhd’s (Pantech) contribution from its manufacturing division is expected to grow healthily due to efficiency improvements on the stainless steel pipe side.
OSK Research Sdn Bhd (OSK Research) stated that the fluctuation in stainless steel prices was the cause of lukewarm growth in Pantech’s stainless steel business.
The fluctuations in stainless steel prices resulting from the volatility in nickel prices were making it difficult for Pantech to manage raw material costs and its selling prices.
Though the volatility had affected the growth pace at its stainless steel division, the steady expansion in its manufacturing division was expected to shore up its overall performance.
Pantech had been clocking in steady growth over the past few quarters and its earnings in the third quarter would be better quarter-on-quarter (q-o-q) for its financial year 2012, the research firm pointed out.
The earnings were mainly attributed to the strong order book in its trading division and improving efficiency in the its stainless steel pipe segment, generating positive contributions for the manufacturing division.
Although OSK Research expected a loss in Pantech’s stainless steel pipe manufacturing division, it would not be as high as in the previous quarters given that its efficiency in making stainless steel pipes had improved.
Pantech’s carbon steel pipe fittings segment was operating at full utilisation and maintaining healthy margins.
The research firm believed that the performance of the manufacturing division would improve and boost its earnings. It maintained Pantech’s fair value at RM0.57 per share.
