KUALA LUMPUR: Dancomech Holdings Bhd — which was the best-performing initial public offering in 2016 — is hoping to grow its revenue and profit by about 15% for the current year as it expands its operations in Malaysia and Indonesia.

Managing director Daniel Aik (pic) said the group’s growth for the year ending Dec 31, 2017 (FY17) will be partly driven by the expected pickup in the palm oil industry in Indonesia after a slight slowdown in FY16.

“Indonesia is a sunrise market for us, especially when you talk about the palm oil-based business. We intend to expand our product offering in Indonesia within the year,” he said in an interview with The Edge Financial Daily.

Daniel pointed out that the group in January signed an agreement with Chun Khong Engineering Works Sdn Bhd for the acquisition of a pump factory in Ipoh, which currently caters mainly to the Malaysian palm oil mill market.

Currently, Dancomech already supplies valves to its palm oil-based clients in Indonesia and plans to begin supplying pumps sometime within 2017.

“This would provide additional revenue for the company, and we will be selling the pumps to the same customer base as our valves, so we don’t need to incur extra costs in terms of human resources.

“We anticipate sales from Indonesia will increase this year, now that the palm oil sector is picking up in line with the better crude palm oil (CPO) price at the moment. We anticipate a revenue growth of 5% to 10% at least for Indonesia this year,” Daniel said.

He added that Dancomech is considering setting up a distribution office in Indonesia in the future, if the prospects are good.

Meanwhile, for the Malaysian market, Dancomech executive director Johnson Aik said the group will push through with its plans to set up distribution offices in Johor as well as in East Malaysia, in Bintulu and Miri.

“We will set up not only offices but we will also keep some stock there to provide better service to our customers, as in faster delivery and easier engagement with potential clients,” he said.

Johnson added that setting up the offices will also translate into cost savings, as the group would be using sea freight to transport its inventory to the offices, rather than airfreighting its products straight to the end-consumer, which is more expensive.

He said that the potential for Bintulu is great as the district has the largest palm oil refinery capacity in Malaysia, while an office in Johor provides the group proximity to Petronas’ Refinery and Petrochemical Integrated Development (Rapid) in Pengerang.

Johnson said the group is also eyeing to secure some ad hoc work at Rapid.

“With our expansion plans for the year, we expect to register [a] growth of about 15% this year,” he said.

For FY16, the group reported a 16% increase in net profit to RM12.85 million or 9.5 sen per share, from RM10.99 million a year earlier.

However, revenue fell 12% year-on-year to RM60 million, partly due to lower contribution from Indonesia.

“That was due to slower activity in the Indonesian palm oil industry, as there was a bit of an oversupply situation. The low CPO price last year was also a factor. But we expect activity to pick up this year,” explained Johnson.

Currently, Dancomech supplies valves to a number of industries, including palm oil, oil and gas (O&G), water as well as rubber glove factories. The largest contributors are the palm oil-based industries and O&G, contributing about 60% and 25% of the group’s revenue per year.

Dancomech’s share price closed down one sen or 0.69% at RM1.43 last Friday, giving it a market capitalisation of RM214.56 million.