Total door system solutions provide Econframe Bhd’s 1QFY24 net profit soared for 88.6% year-on-year (YoY) for its first quarter (1QFY24) financial results for the period ended 30 November 2023Y to a record RM4.4 million versus RM2.3 million a year ago.
“This was driven by stronger sales from the group’s manufacturing business coupled with the maiden contribution from its recently completed acquisition, Lee and Yong Aluminium Sdn Bhd (LYASB),” it said in a statement today (Jan 29).
Econframe completed the acquisition of a 65% stake in LYASB back in September 2023, a specialist in the fabrication and installation of aluminium glazing, glass products and facade works.
The acquisition comes with a profit guarantee by the vendor that LYASB shall achieve an audited profit after tax (PAT) of not less than RM4 million each year for 3 years from Aug 31, 2024 to Aug 31, 2026) and a minimum cumulative audited PAT of not less than RM12 million (LYASB profit guarantee).
For the quarter under review, the group posted yet another record turnover of RM27.2 million, a surge of 61.2% YoY from RM16.9 million achieved in 1QFY23.
Similarly, the growth was mainly driven by higher sales from the group’s manufacturing business along with LYASB’s maiden contribution.
Econframe group managing director Lim Chin Horng expressed his thrill to start the new financial year with a strong showing and kept up the healthy earnings growth momentum.
“It is noteworthy to highlight that this is the ninth successive quarter of revenue growth since 4QFY21. Moving forward, we continue to be upbeat on our prospects premised upon the sustained order flow coupled with the exciting synergies from LYASB as well as the LYASB profit guarantee,” Lim said.
He said just a few months after LYASB’s acquisition, Econframe has successfully secured several projects and enhanced its order book.
“This is a clear testament to our combined potential and market confidence in our products. In view of the increase in LYASB’s order book, we have plans to expand the production capacity at its Kota Bahru facility.
“This would enable us to capture a larger market share and further cement our position in the industry. Together, we will continue to leverage on each other’s strengths and expertise to broaden our geographical reach and cross sell our products to our existing customers,” Lim added.
Earlier this month, the group had on 15 January 2024 entered into a conditional share sale agreement (SSA) with ETA Industries Sdn Bhd to acquire a 70% stake in ETA World Sdn Bhd (ETA World) for a purchase consideration of RM56 million.
A total of RM28.1 million is to be satisfied in cash and the remaining RM27.9 million via the issuance and allotment of 30 million new ordinary shares in Econframe for the proposed acquisition.
ETA World is a leading industrial property builder, providing turnkey design and building of industrial buildings.
The proposed acquisition comes with a profit guarantee by the vendor that ETA World shall achieve an audited PAT of not less than RM10 million each year for 3 years and a cumulative audited PAT of not less than RM30 million (ETA World profit guarantee).
“This is part of our plan to grow inorganically but staying within the value chain that we are in to strengthen our position in the latter.
“We are certainly excited by this development as it allows the enlarged group to capitalise on the promising opportunities present in the industrial property market.
“ETA World has an outstanding order book of RM165.5 million as of end-December 2023, giving it clear earnings visibility in the coming years while its profit guarantee would ultimately enhance and diversify our bottom-line.
“All in all, the outlook for the group remains bright underpinned by the aforementioned factors,” Lim concluded.
