SHAH ALAM (Oct 7): DRB-Hicom Bhd's aerospace unit Composites Technology Research Malaysia Sdn Bhd (CTRM) aims to grow its revenue by 20% for its financial year ending March 31, 2016.

"Last year we reported about RM680 million in revenue. This year, we're looking at another 18% to 20% increase," said CTRM group chief operating officer and chief executive officer Che Akhma Ismail.

He said the higher revenue target of RM800 million to RM900 million for the year will contribute to DRB's revenue target of RM14 billion to RM15 billion.

CTRM's performance will be supported by its secured contracts, with a total order book of RM9 billion to last the company until 2030.

Che Akhma was speaking to the press today, following the signing of an extension for the contract with UTC Aerospace System (UTAS) for the supply of aircraft components of three work packages.

"The extension will give additional average income of RM218 million from 2016 to 2030," said Che Akhma.

Meanwhile, the company will continue to expand its capacity, aiming to add at least one autoclave per year. The company currently has 12 autoclaves at its Batu Berendam facility in Melaka.

Besides, CTRM is also planning to set up a new facility to meet the increasing demand.

"OEMs like Airbus, Spirit and UTAS see us as a company that is very big in one location. Indirectly, they expressed their concern that if we put everything in one basket, one location, the risk of delivery is very high. Should anything happen to the facility, we won't be able to deliver on time.

"Since DRB has a lot of land, both DRB and CTRM are looking at mitigating our risk through the saparation of the facilities from Batu Berendam," he said, adding that it will be built next year.

When asked where the new facility will be located, Che Akhma said it may or may not be located in Melaka, adding that the company is looking at a few potential locations.

To facilitate its expansion plans, CTRM has allocated over RM300 million of capital expenditure (capex) for the period of 2014 to 2018. In 2014, the company spent around RM170 million in capex.

When asked if the company is facing any margin compression due to the current unfavourable currency outlook, Che Akhma said the company has a natural hedge as 65% of its transactions are denominated in US dollar, while the balance is denominated in British pound.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)