Magni-Tech eyes diversifying into property and manufacturing

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GEORGE TOWN: Garment and packaging products manufacturer Magni-Tech Industries Bhd is looking at diversifying into the property and manufacturing sectors, with a net cash position of more than RM100 million.

“We will look at prospects in the manufacturing sector to see if there is sustainable demand. With the (shareholders’) mandate (including the renewal of the authority under Section 132D of the Companies Act 1965 for directors to allot and issue shares) that is sought every year, we can look at these (new business) opportunities,” its managing director Tan Poay Seng said after the group’s annual general meeting here yesterday.

Tan said the group is in no hurry to acquire or diversify.

“We always keep an open mind on opportunities though we also take a prudent approach. We look at our size and realise we must conduct due diligence before taking on a new sector. We don’t want to be hasty and go into certain industries including development. Last year, property development was a buzzword but not so today because everyone is facing a down cycle judging from the property prices,” he added.

Its chairman Tan Sri Tan Kok Ping said Magni-Tech, which is primarily engaged in the manufacturing of garments for exports from which 82% of its revenue is derived, will remain steadfast in its strategies.

Kok Ping said the recent fuel subsidy reduction will affect the group’s overall gross margin. “Although so far there has been no increase in our logistics transportation cost, I foresee it would increase in the next few months,” he added.

He remains cautious on the outlook ahead, but both garment and packaging businesses are expected to stay profitable in financial year 2015.

This article first appeared in The Edge Financial Daily, on October 9, 2014.