This article first appeared in The Edge Financial Daily, on June 28, 2016.

KUALA LUMPUR: Dolphin International Bhd, a palm oil machinery maker, will not reach out aggressively for new job orders this year to stay away from irrational competition.

Its managing director Eric Low Teck Yin said pricing of job orders is falling and it would therefore not be wise for Dolphin to risk its profitability by bidding for these works.

“This is not a good time to fight for more orders because the profitability of these works may be low. And we do not want to have very high orders, while not [being] able to reap profit from them,” he told theedgemarkets.com after the group’s annual general meeting yesterday.

“Instead, we are focusing on our existing orders and R&D (research and development),” he said, adding that the group’s prospects remain intact as crude palm oil is deemed a necessity to the world.

Low said Dolphin does not expect to see any major change in its results for the financial year ending Dec 31, 2016 (FY16), compared to FY15.

“The market was very volatile last year, but things are stabilising now, especially the exchange rate. Our results may be similar to last year, but we will try our best to do better,” he said.

Dolphin posted a net profit of RM2.86 million for FY15, halved from RM5.77 million in FY14, despite revenue growing by 22.28% to RM69.44 million from RM56.78 million.

For the 1QFY16, Dolphin’s net profit fell sharply to RM5,000, from RM3.11 million a year ago, while revenue rose 7.51% to RM11.42 million from RM10.62 million.

Dolphin said the decrease in profit was mainly due to lower profit margins and higher financing cost.

Low said the group’s customers had to revise their budget in spending on machinery.

“When they did their budget last year, the exchange rate to [the] US dollar was just three something; it became volatile for a period of time. Now, it is at the level of four and is beginning to stabilise, so these clients are doing their budget again before they spend,” he said.

Last week, Kenanga Research downgraded Dolphin to a “trading sell” with a target price of 56 sen, from a “trading buy” which came with a TP of 78 sen previously.

“[Its] FY15 reported earnings of RM2.9 million made up only 8% of our estimate due to slower-than-expected completion of order book projects, which led to poor revenue recognition,” Kenanga said.

“We anticipate existing project completion to be slightly stretched over time and order book replenishment levels to be slow as well,” the research house added.

Dolphin’s share price closed unchanged at 58 sen yesterday, giving it a market capitalisation of RM128.76 million.