The computer forms printer and distributor eked out a RM74,000 net profit in Q3, a 72.8% decline from the RM272,000 profit in the corresponding quarter a year ago. It had made a loss of RM1.21 million in Q2, following a loss of RM400,000 in Q1 of its fiscal year.
For the first nine months of FY2023, CFM posted a loss of RM1.57 million compared to a net profit of RM61.91 million in the corresponding period a year earlier when there was a non-recurring gain on disposal of properties amounting to RM63.15 million.
Its nine-month revenue edged up 4.21% to RM21 million from RM20.15 million, with the flexible packaging business posting the highest contribution at RM9.67 million.
Whilst higher orders for its core business of printing have contributed to the improvement, the group is pessimistic about seeing significant growth in demand for its printing services.
“The management expects performance in the next financial quarters to remain sluggish in view of the weaker demand and challenging economic environment caused by rising raw material prices, higher oil prices and the stronger US dollar,” it said.
Placing bets on EV
Just last month on Jan 5, CFM was basking in the spotlight of securing a lucrative 50-50 joint venture (JV) with Thailand’s EA Mobility Holding Co Ltd (EA).
The deal even gained a stamp of approval from Prime Minister Anwar Ibrahim after a courtesy call from EA’s CEO Somphote Ahunai and his delegation to Putrajaya.
Anwar immediately took to social media to highlight the RM5 billion JV, and referring to Somphote as the “Elon Musk of Thailand”.
The issued share capital of the JV was set at RM12.5 million of which CFM will invest RM6.25 million.
“CFM will fund its investment in the JV company through its internally generated funds and/or bank borrowings, the proportion of which will be determined at a later date,” the group said in its Jan 5 filing with Bursa Malaysia.
However, given its disappointing financial results this fiscal year, it remains a mystery as to how CFM will contribute its share of the RM5 billion price tag.
In 2021, the company sold various land assets, raising a sum of RM91 million. As of Feb 13, CFM had utilised the proceeds primarily for a special interim dividend, with RM41 million in balance.
Regardless, the group is optimistic this diversification will have a positive impact that reflects on their balance sheet to mitigate the identified risks.
“The incorporated JV company, namely Energy Absolute (M) Sdn Bhd, will allow the group to diversify into the electric vehicle industry which is expected to provide (a) sustainable income stream in addition to the current income stream,” it said in the filing.
The JV company will be in the business of selling, distributing, assembling and producing electric vehicles such as the E-bus, E-truck, E-ferry and electric vehicle chargers. The announced venture is expected to be completed by the first quarter of 2023.
However, since the initial announcement, no further details have been released.
Out with the old, in with the new
CFM also outlined plans to relocate its existing factories by acquiring two new ones to avoid an interruption of its business, it said in the filing on its Q3 results.
The new factories, in an undisclosed location, is part of its plans to improve their financial prospects in the short to medium-term.
Additionally, CFM noted it sorely needed to invest in new machinery and equipment to support its core business activities. “Most of the existing equipment and machineries are more than 20 years old.”
To support this undertaking, it has carried out a series of private placements from Sept 7, 2022, with the most recent on Jan 19 this year.
Out of the proceeds from the placements, RM56.6 million had been allocated and utilised for the group’s capital expenditure, and the remainder covering expenses for the proposals.
At the close today, CFM’s share price fell 17 sen or 5.92% to RM2.70, giving it a market capitalisation of RM720.85 million.