Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on May 22, 2017

KUALA LUMPUR: ACE Market-listed BCM Alliance Bhd is aiming to enter Indonesia for its maiden overseas venture within two years, according to its executive director Lim Jit Wei.

Lim said the expansion will begin with the opening of new self-service laundry outlets in densely populated cities such as Jakarta and Surabaya. Indonesia is seen as a springboard for BCM Alliance’s planned regional expansion that encompasses other Indochina countries.

“We see tremendous opportunities for our business in Indonesia and Indochina countries like Vietnam, Laos and Cambodia. In these countries, the concept of self-service laundry [outlets] is still quite new,” Lim told The Edge Financial Daily.

However, BCM Alliance has yet to set aside any amount for the expansion, as it is still considering several factors before making a final decision on whether to embark on its overseas venture.

“We want to ensure our overseas venture will work out in our favour. We are not only looking at demand for our products but also the regulatory environment such as [the] foreign ownership cap on businesses,” he added.

On the time required for each laundry outlet to break even, Lim said it normally averages around 2.5 years to three years, depending on the outlet’s location and the surrounding population’s growth.

BCM Alliance is the exclusive distributor of US-based Alliance Laundry Systems’ commercial laundry equipment in Malaysia. Alliance is also the largest commercial laundry company in the world.

Currently, the group’s biggest revenue generator is its laundry business, contributing 63% of total revenue. The remaining 37% comes from its medical device business.

The high contribution from its laundry business is due to its ability to capitalise on the growth in sales of vended commercial laundry equipment, as the number of launderette outlets in Malaysia continues to grow.

“Changing weather and consumer patterns also helped boost our commercial laundry revenue. By this financial year, we are hoping to balance the revenue mix, so that each business contributes revenue in equal proportions.”

BCM Alliance was listed on the ACE Market of Bursa on Oct 24 last year at 19 sen per share. It raised RM16.01 million from the listing, the bulk of which was allocated to expand its “Speed Queen” laundry outlets throughout Malaysia.

To date, BCM Alliance has opened a Speed Queen outlet in Kuala Lumpur and another in Selayang. The third outlet is due to open in Seri Kembangan by end-July.

Meanwhile, BCM Alliance managing director Liaw Chong Lin said the firm’s medical device business would rebound after earnings slipped due to a delay in product orders.

“Some private hospitals had to delay their construction because of a change in [the] main contractor. It has directly impacted us, but we expect these hospitals to commence operations this year,” said Liaw.

In the financial year ended Dec 31, 2016 (FY16), revenue of BCM Alliance’s medical business segment — operated via Best Contact (M) Sdn Bhd and Maymedic Technology Sdn Bhd — fell 4% to RM24 million from RM24.93 million a year ago.

“Immediately after listing, we kicked off with [securing] a nice contract from Quantum Medical Solutions Sdn Bhd. Going forward, with completion of several of the private hospitals mentioned, we should be able to deliver our products to customers as required,” Liaw added.

BCM Alliance secured a three-year contract worth RM19.68 million from Quantum Medical Solutions on Nov 5, 2016, to supply and maintain medical support services equipment to specified government clinics, until Nov 10, 2019.

Liaw said BCM Alliance expects to meet Bursa’s criteria to transfer its listing to the Main Market within three to five years. “We are hoping to chalk an aggregate net profit of RM20 million. It is a challenge I have set for all my team members. We are hopeful of achieving this earlier than our forecast.”

Going forward, Liaw said BCM Alliance may look at opportunities to venture upstream in the medical devices value chain. “We are currently a trading company selling medical equipment. However, with attractive government incentives available, I hope that BCM Alliance will go into the manufacturing of medical devices in the not too distant future.”

Since its listing, BCM Alliance shares have risen 18% to close unchanged at 22.5 sen last Friday, with a market capitalisation of RM94.78 million.

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