Perstima ... Aug 09

Perusahaan Sadur Timah Malaysia (Perstima) Bhd, whose net profit fell 4.5% year-on-year in its first quarter ended June 30, 2009 (1QFY09), has the potential to reward its shareholders with higher dividends in the future, given its cash position.

While the company did not have a stated dividend policy, it had paid out dividends of 20 sen per share annually over the last three years.

They have completed all its capacity expansion for now, and the group has cash of about RM58 million as at end of March 31, 2009.

Its 1QFY09 net profit fell 4.5% to RM9.9 million from RM10.37 million a year earlier, while revenue fell 11% to RM193.87 million from RM218.33 million mainly due to lower sales. No interim dividend was declared.

Its capacity expansion at its plants in Pasir Gudang and in Vietnam had been completed.

Perstima would continue to focus on expanding its presence in the Middle East as well as other Islamic countries, including Indonesia and Bangladesh. These countries accounted for up to 30% of Perstima’s total exports. On the domestic market, while demand had not fully recovered to pre-2007 levels, it was nevertheless gradually improving.

Perstima has equipped itself with additional facilities of producing the tinplate and tin free steel, and is well prepared to capture additional markets with competitive pricing.

The biggest problem faced by the company now was the currency controls in Vietnam, where regulators had a fixed rate for the US dollar. The rate fixed for the US dollar against the Vietnamese dong is different from the actual foreign exchange rate, and there are not enough US dollars available in Vietnam.

The company continued to explore other avenues in Vietnam, including securing payments using the Japanese yen or other currencies to circumvent the problem with payments in US dollars.

For the financial year ended March 31, 2009, Perstima posted a net profit of RM32.25 million on revenue of RM985.75 million.