By NUR HAZIQAH A MALEK
THE Covid-19 pandemic and resulting stay home and work from home routine benefitted can makers abroad due to the rise in consumption of packaged products.
Some American brewers for instance had problems sourcing can due to the rapid increase in demand for canned alcohol as bars were shut due to lockdown to control the spread of the virus.
Malaysian can makers have not benefitted much from any such trend here judging from their financial numbers, but as economic activity is anticipated to pick up strongly this year, the expected rise in consumption trends appear to provide a positive outlook.
Investors have bought into Can-One Bhd in anticipation the can maker is set to ride on the positive growth prospects for the edible oils and beverage market in 2021.
The can makers share price has surged some 37% from the RM2.50 level in early November to RM3.44 last Friday as investors expect the largest can maker in the country will benefit from growth in the beverage metal cans market which is expected to register a compound annual growth rate (CAGR) of 8.9% during the forecast period 2021 to 2027.
Meanwhile, the plastic steel food can market is expected to register a CAGR of 4.3% during the same forecast period.
“Can-One shares are trading at a year high and technically, its price chart suggests the stock price is looking to test the RM3.65 level. Fundamentally, the company could benefit from the progress with its streamlining operations despite a rise in price of raw materials like aluminium,” said an analyst with a local broker.
Kian Joo Group, via Kian Joo Can Factory Bhd, was acquired by Can-One International Sdn Bhd, a wholly-owned subsidiary of Can-One on May 10, 2019.
Can-One then began streamlining operations by relocating some of its operations in the Klang Valley and consolidating to improve efficiency.
For its fourth quarter ended Dec 31, 2020 (4Q20), Can-One recorded significantly lower RM32.48 million in net profit versus the previous year’s corresponding quarter net profit of RM588.85 million.
Its revenue, however, did not change by a lot from RM696.33 million in 4Q19 to RM662.58 million in 4Q20.
For its 2021 prospects, Can-One noted that it expects challenges will remain for the company moving forward with the ongoing pandemic.
“Business operations and supply chain globally continue to be disrupted which caused logistical issues and rising raw material prices.
“Management will continue to be vigilant to ensure strict compliance with standard operating procedures issued by the relevant coun- tries’ government to minimise dis- ruption to our business operations,” it said in its financial report dated Feb 25, 2021.
It also added that its plants in Myanmar have not been affected by the recent political upheaval there, but uncertainties have been cast over its operations, stating it will constantly monitor the development closely.
The group said its board of directors are cautiously optimistic on the group’s business prospects.
“This is underpinned by the development of new export market opportunities, leaner operations and emphasis on operational efficiency to deliver sustainable growth and satisfactory results for the financial year ending Dec 31, 2021,” the company’s filing noted.