KUALA LUMPUR (Oct 17): ACE Market-listed Minox International Group Bhd, which gained 48% on its maiden trading day on Bursa Malaysia on Tuesday, will pass on cost increases stemming from the 2% hike in service tax to its customers, following the government's announcement in Budget 2024 that the tax would be raised to 8%.
“We will pass [the increased] costs on to customers. We have... standard prices for our customers. But at the moment we have no intention to increase costs,” said Minox managing director Cheong Chee Son at a press conference after the group’s listing on Tuesday.
Minox, through its subsidiaries, is principally involved in the distribution of stainless steel sanitary valves, tubes and fittings, installation components and equipment, and rubber hoses under the “Minox” brand and other related products.
It relies heavily on third-party manufacturers or suppliers for its product supplies. Any substantial cost increase from these suppliers due to higher raw material prices will directly impact Minox's cost of purchase. Currently, the group has 13 third-party manufacturers and one supplier that supply its “Minox®” brand of sanitary products.
The group has a customer base of approximately 1,700 active and recurring customers that comprise of project consultants, contractors as well as industrial end-customers such as Duopharma (M) Bhd, Spritzer Bhd’s wholly-owned unit Chuan Sin Sdn Bhd, Nestle Manufacturing (Malaysia) Sdn Bhd and Campbell Cheong Chan (Malaysia) Sdn Bhd.
Minox’s share price traded at 31.5 sen at the opening bell on Tuesday, 26% higher than its initial public offering (IPO) price of 25 sen. The counter rose to a high of 37.5 sen before easing to close at 37 sen (up 12 sen or 48%). At the closing price, Minox's market capitalisation amounted to RM133.2 million.
It was the most active stock with 265.54 million shares traded.
Having raised RM22.5 million from its IPO, Minox will introduce new vacuum fittings and valves tailored for semiconductor production lines, said Cheong.
“We will construct a fourth warehouse in Puchong to cater for higher sales volume, and we expect the warehouse to be completed by the second quarter 2025. Another facility is to set up a new warehouse in Singapore to store our new vacuum fittings and valves for the semiconductor industry as well as to store inventories that cater for customers in Singapore and abroad.
“Currently, we are looking into a few details about the location. We are positive on the outlook of the semiconductor industry as growth [in this sector] will be driven by investments from global multinational corporation (MNC) companies,” he added.
Cheong observed that the group will benefit from lower average cost per unit for sanitary products exported from Singapore as the country has free trade agreements with trade partners.
Minox’s profit after tax (PAT) more than doubled to RM7.9 million in the financial year ended Dec 31, 2021 (FY2021) from RM3.6 million a year earlier despite revenue falling 11.3% to RM34.4 million from RM38.8 million. PAT climbed 30.4% to RM10.3 million in FY2022 on a revenue of RM45 million.
About 88.8% of the group’s FY2022 revenue was generated from sales to the food and beverages (F&B) industry, followed by semiconductor (6.7%) and pharmaceutical (4.5%).
The group’s PAT margin, meanwhile, increased from 9.2% in FY2020 to 23% in FY2021 before slipping slightly to 22.9% in FY2022.
