TecNic ... Mar10

Plastic maker Tecnic Group Bhd is set to ride on the economic recovery in 2010.

The company has begun to secure new contracts including a vendor status to provide decorative components for Sony LCD flat panel televisions and to supply containers for Lady’s Choice mayonnaise to Unilever.

It now supply to three major LCD TV producers — Samsung, Panasonic and Sony.

It denied the entry of Unfold Riches Sdn Bhd into the company, with the acquisition of a 10% stake in Tecnic on March 2 2010, was the prelude to further shareholding changes or the entry of another major shareholder. It said these are private parties that they have known for some time and the company (Unfold Riches) was set up recently to hold their investments that include not only Tecnic, but other companies as well.

Its mould-making capabilities housed under 100%-owned Sun Tong Seng Mould-Tech Sdn Bhd. The tool-making is key to a plastic manufacturer. Typically, it makes its own toolings. At present, Tecnic Group has the capability to build moulds weighing up to 1,500 tonnes, said Gan, adding that this was still a rarity.

There are a number of other mould-makers and plastic injection moulding companies in Malaysia, such as VS Industry Bhd, Ralco Corp Bhd, SKP Resources Bhd, LTCH Corp Bhd and Teck See Plastic Sdn Bhd (unlisted) to name a few.

Tecnic Group mostly supplies triple-lock pails to numerous oil and gas multinationals, as well as other moulded plastic products to other sectors such as automotive, medical equipment, electronics and electrical.

Injection moulding contributed about 85% of Tecnic Group’s revenue of RM137.5 million for its financial year ended Dec 31, 2009, while mould making made up the 15% balance.

The company is currently bidding to supply to Shell in Vietnam. For Shell, Tecnic supplies its pails to Malaysia, Singapore, Thailand, the Philippines and Hong Kong.

It also supplies its triple-lock pails to oil and gas majors Shell (in several countries), BP Castrol in Malaysia and ExxonMobil in Singapore.

The company holds the patent for its triple-lock pails.

Being able to supply to all these major oil and gas MNCs does provide a strong testimony to the group’s capability. The vendor selection by these MNCs is a long and tedious process, involving many levels of approvals, auditing of vendor factory, quality assessment etc. As such, MNCs usually do not simply change panel vendors unless the vendor breached contract terms.

Tecnic has been able to achieve strong growth in revenue and profit in FY08 and FY09, despite the weak global and local economy which is due to the resilience of its new focus on producing higher value products for multinational companies.

Tecnic posted a 48.6% jump in net profit to RM12.82 million in FY09 from RM8.6 million in FY08, while revenue grew 25.8% to RM137.5 million from RM109.3 million.

Tecnic had a net debt of about RM40.08 million on its balance sheet as at Dec 31, 2004 that was gradually pared down to RM2.26 million at Dec 31, 2007. The debt situation has changed quite dramatically in the FY09 financial results.

Tecnic has turned to a net cash position of RM5.6 million or 14 sen per share at end-
December 2009, compared with a net debt of RM2.98 million the year earlier.

The company does not at present have a formal dividend policy.