KUALA LUMPUR: Box-Pak (M) Bhd, a subsidiary of Kian Joo Can Factory Bhd with a 54.83% stake as at Feb 27, 2015, expects its operations in Hanoi, Vietnam and Johor to turn around by the end of this year.

“We need a longer gestation period for both of these production plants because Hanoi is a greenfield project, while the Johor plant is undergoing some integration process subsequent to our acquisition,” its chief financial officer Ooi Teik Huat told reporters after the group’s annual general meeting yesterday.

Box-Pak’s (fundamental: 0.8; valuation: 2) Hanoi production plant began operations in the fourth quarter of 2013, while the Johor factory started operations in January last year.

Meanwhile, Ooi said the corrugated carton box maker is not expecting to repeat its double-digit revenue growth level of the financial year ended Dec 31, 2014 (FY14) this year.

Rather, it sees moderate growth in revenue for FY15.

“The growth we achieved last year was a rather significant one, but it can only be done by setting up [a] new factory,” Ooi said.

Box-Pak posted a revenue of RM352.81 million in FY14, up 17.6% from RM300.14 million in FY13. Net profit, however, fell 34.19% to RM7.85 million from RM11.93 million in FY13.

Ooi believes that Box-Pak will continue to face a challenging year in FY15, but said the management will continue to improve its operational efficiency to mitigate the effects of margin compression.

“The [implementation of the] GST (goods and services tax) will result in an increase to our material cost, while in Vietnam we are facing higher competition from the players there,” he said.

Box-Pak closed RM2.33 yesterday, down two sen or 0.85%, with a market capitalisation of RM139.85 million.

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This article first appeared in The Edge Financial Daily, on April 16, 2015.