KUALA LUMPUR (Dec 19): Aluminium products maker Winstar Capital Bhd (KL:WINSTAR) is expecting sales to grow in 2025, with the removal of China’s export tax rebates for aluminium products, and the upcoming implementation of the fifth iteration of Malaysia’s large scale solar programme (LSS5).
On Dec 1 this year, China removed the tax incentives not only for aluminium, but also copper, and certain oils and fats. It also lowered the rebate rates for refined oil, photovoltaic products and batteries from 13% to 9%. China introduced its tax rebate system in 1985 to make Chinese products more competitive in international markets.
The removal of China’s export tax rebates for aluminium is expected to significantly benefit Winstar, whose share price jumped over 40% on its ACE Market debut on Thursday.
“China’s aluminium products will now sell at higher prices without the rebates, which will make Winstar’s offerings more attractive to buyers,” said Vincent Chua Boon Hong, non-independent executive director and chief executive officer of Winstar.
Winstar is also actively pursuing opportunities in Malaysia’s burgeoning solar photovoltaic (PV) market, and an announcement on Winstar’s involvement in LSS5 projects is expected in January 2025, Chua said.
The company aims to capture a 5% share of the local market for LSS5 solar PV mounting structures, excluding installation services. It currently holds a 2.75% market share of the estimated RM3.2 billion market.
To support its growth ambitions, Winstar is expanding its production capacity by adding four new aluminium extrusion lines. This will increase annual capacity from 6,705 tonnes to 15,285 tonnes, with the first two lines expected to be operational by the second quarter of 2025, and the remaining two by mid-2026.
“The new extrusion lines are expected to deliver about 10% higher capacity compared to existing ones, with reduced manpower requirements and fewer operational challenges,” Chua added.
Winstar’s current production capacity utilisation hovers around 75%. However, the company acknowledges that 100% utilisation is unlikely due to the varying weight and complexity of different aluminium profiles.
The company remains focused on its solar panel business, which operates on a purchase-order basis with daily orders averaging RM1 million. This approach helps mitigate risks associated with recent price fluctuations in the solar market.
For the third quarter ended Sept 30, 2024 (3QFY2024), Winstar reported a net profit of RM3.31 million or 1.42 sen per share, on revenue of RM58.76 million.
At 5pm, Winstar shares closed at 51 sen apiece, 16 sen or 45.71% higher than its initial public offering price of 35 sen, giving the company a market capitalisation of RM148 million.