NIBONG TEBAL: Boon Koon Bhd caught investors’ attention lately as it announced plans to dispose of its remaining 25% stake in Hitachi Capital Malaysia Sdn Bhd for RM22 million, which has caused its share price to almost triple since the December announcement.

When met on Friday, Boon Koon founder and executive chairman Datuk Goh Boon Koon told The Edge Financial Daily that the group is exploring opportunities of expanding its business portfolio from the anticipated RM16.1 million gain from the stake sale.

However, he declined to elaborate.

Meanwhile, he admitted that the past year has been tough on the rebuilt commercial vehicle manufacturer. Its financial performance was dragged down by foreign exchange losses from the import of auto parts as the ringgit fell, and higher loan rejection rate among its customers.

Boon Koon, which derives nearly 90% of its revenue from its rebuilt commercial vehicle (RCV) segment, has been in the red for four straight years. The remaining contribution comes from its forklift rental and new commercial vehicle segment.

Going by the net loss of RM831,000 it recorded in the nine months ended Dec 31, 2016 (9MFY17), against a net profit of RM504,000 in 9MFY16, the full-year’s earnings prospect is not looking too good.

Its core RCV segment reported a loss before tax of RM1.9 million in the third quarter ended Dec 31, due to lower profit margin attributed to higher imported component costs, price competition, and higher operating expenses. Boon Koon imports about 60% of its vehicle parts from China and Japan.

“We are losing out on the exchange rates for the yuan and yen whenever we trade or import parts. We cannot keep changing the rates with our customers when the ringgit weakens. So we have to contend with a smaller margin,” he said.

And prospects for the financial year ending March 31, 2018 (FY18) will be challenging if the ringgit remains volatile, conceded Goh.

Nevertheless, the group has decided to push ahead with the introduction of some new reconditioned commercial trucks and motorcycles, which it hoped would better its prospects from FY18 onwards.

This is because demand for its vehicles remains strong, said Goh. This is evidenced by the stronger revenue the group had been seeing in its third quarter of FY17 (3QFY17) — where top line grew 43% to RM22.1 million. Its 9MFY17 revenue also swelled 37% to RM75 million.

“Demand for our trucks is high. In the meantime, we aim to launch the upgraded version of our Viflex 2.0, which is a 1.5 litre engine, in the 3QFY18,” Goh said.

Speaking after the group’s extraordinary general meeting, which approved the disposal of the group’s remaining 25% stake in Hitachi Capital, Goh said Viflex is increasingly popular among “food truck” business vendors.

“When we first launched the truck in 2016, young entrepreneurs were keen on them because they could [easily] set up a mobile food truck business by having a kitchen fitted in,” he said.

The first generation Viflex truck is a 1.3 litre model. Priced from RM41,800, some 400 units were sold as at Dec 31. The 1.5 litre version will be 10% pricier, to meet customers’ size and capacity requirements, said Goh.

Its 150cc motorcycles, which it will be selling under the brand “BKM”, are at the final stages of research and development and are expected to hit the market sometime in FY18 too, said Goh.

Boon Koon shares closed one sen or 2.86% lower at 34 sen last Friday, with a market capitalisation of RM95.47 million.