KUALA LUMPUR (June 27): Goh Ban Huat Bhd (GBH) plans to venture into property development within the next three to five years.
The sanitaryware trader has 5.92ha of prime land located in Jalan Segambut, Kuala Lumpur, on which its manufacturing plant is built.
"As you know, property prices in areas near Segambut and Mont Kiara have escalated. Land cost has increased as well. Our factory is sitting on expensive land," said GBH director Thor Poh Seng after the company's AGM on Tuesday.
According to Thor, GBH is doing some "conceptual planning". "We feel there are too many condominiums [in Segambut and Mont Kiara] at the moment. We think that there is an over supply in condominiums," he said.
"We will time our property development plans appropriately when we embark on them," he added.
Thor said the group will explore options on which model that to adopt for the property development project. This ranges from developing the land on its own to forming a joint venture with reputable parties.
About two years back, GBH underwent a drastic change in management, after Tan Sri Robert Tan Hua Choon gained control in the group, resulting in the ouster of the Goh family, who founded the sanitaryware manufacturer.
GBH currently relies on clay pipe manufacturing and trading on sanitarywares.
For FY11 ended Dec 31, the group achieved a modest net profit of RM623,000 after it had been loss-making since FY06.
For the 1Q ended March 2012, GBH recorded revenue of RM11.026 million, up 7.37% from a year ago. However, its bottom line recorded a net loss of RM196,000 compared to a net profit of RM6,000 a year ago, mainly due to lower sales, gross profit margin and increase in staff cost.
For FY12, Thor said GBH is optimistic that the demand for clay pipes, the company's core activity, will continue to be strong and expects to see a 5% to 10% revenue growth in the division.
On the other hand, Thor said revenue from its ceramic tableware division is cyclical as it is project-dependent.
He added that the group is currently pursuing projects with parties such as the palace, the government and particularly, government-linked companies.
"Hopefully within the next six months, we will be able to secure some of these projects. Other than that, we are very much dependent on the retail business we have built over the last couple of months," he said.
As for its trading division, Thor said the group will focus on building a network of distributors and its presence in the retail market.
This story appeared in The Edge Financial Daily on June 27, 2012.