SYF expects to sustain 2-digit earnings growth

The Star, Friday, 8 January 2016

by cheryl poo

Chee (left): ‘We have been working to reposition ourselves, to find our own space in the market.’

Furniture maker says this will be done through cost efficiency

KUALA LUMPUR: SYF Resources expects to maintain double-digit earnings growth for its financial year ending October 31, 2016, on the back of better management and cost efficiency of its timber manufacturing business, as well as promising property launches.

Speaking to reporters at the company’s annual general meeting, its executive director Datuk Seri Chee Hong Leong said the company was streamlining its business model and standard operating procedures so as to heighten efficiency levels for the manufacturing arm.

“We have been working to reposition ourselves, to find our own space in the market so that we are distinct like other players in the market,” Chee said.

“We don’t want to compete with them on furniture, but instead we try to find ways to create revenue with less workers. As part of that plan, we have moved upstream into the timber business so that our business is end to end - from raw material to finished goods. 

“This increases our returns.”

Additionally, SYF Resources’ furniture export business, which contributed to a third of the group’s revenue, was a beneficiary of the ringgit’s weakening against the greenback.

“It would be good for this arm in our business if the US dollar continued to strengthen,” Chee said.

SYF Resources was planning to launch two property developments worth RM100mil each in gross development value after Chinese New Year. 

These projects, the Lavender Residence in Bandar Sungai Long and another in the neighbouring vicinity, would contribute to the total RM500mil GDV planned for the next three to four years.

Currently, its unbilled sales were close to RM200mil.

SYF Resources was planning to maintain the growth of its property segment at a steady rate, and as such, it planned for the development RM80mil-RM100mil in GDV per annum.

“We have adopted a lean approach to acquiring properties so that we don’t gear up since we are still perceived as a manufacturing company. If we gear up too much when our peers in the sector maintain a low gearing, it wouldn’t look good on us.”

At the moment, SFY Resources’ gearing stood at 0.4.

That’s why we only focus on areas like Sungai Long, Kajang, Cheras and Semenyih where we are very familiar.”

For the first financial quarter ended October 31, 2015, SYF Resources posted a net profit of RM10.8mil, double the RM5.1mil in the same period last year.

Revenue came in at RM95.9mil, 58% higher than RM60mil last year.

The company attributed the improved financial performance to a significant increase in the recognition of the company’s on-going property projects amounting to RM28mil. 

There was also an increase in the company’s board sales amounting to RM3.2mil as production capacity improved, as well as an increase in rubberwood export furniture sales by RM7.3mil due to higher sales and the strengthening of the US dollar.

SYF Resources had allocated a RM41mil capital expenditure for the construction of its third plant.

Meanwhile, SYF Resources was planning to introduce a dividend policy payout by 2017.

“If things go as planned, we should be able to see some dividend by then. But we need to reduce our gearing first as it is now high due to our property developments,” Chee said.

A dividend payout would be a trade-off, executive director Cheong Yee Kiong said, as the company’s earnings per share needed to be upped to a “respectable level”.