AH cautious on investment
SET-listed auto parts maker Aapico Hitech Plc (AH) remains conservative about new investment and acquisitions, citing stiff competition and a weak automotive industry.
The company is seeking investment opportunities in India, Malaysia and Indonesia through mergers or acquisitions, said president and chief executive Yeap Swee Chuan.
"We've learned from painful experiences in past acquisition deals, as some firms we acquired are still unsuccessful," he said. "So any new deals need careful consideration and study."
Nonetheless, Mr Yeap said the company remains committed to its plan to become one of Asia's top automotive companies by 2020 with revenue of 30 billion baht and a net profit margin of 10%.
Overseas revenue is expected to account for half the company's total by 2020, up from the current 24%.
Founded in 1996, Aapico has three business units: parts maker, car dealer and navigation systems provider. The company has operations in Thailand, Malaysia and China.
Its five facilities in Bangkok, Samut Prakan, Ayutthaya, Chon Buri and Rayong account for 76% of total revenue.
Aapico has set aside an investment budget of 400 million baht this year, mostly for machine maintenance, with 50 million spent in the first quarter.
The company reported first-half revenue growth of 3.5% year-on-year to 7.65 billion baht, with net profit rising 104% to 288 million baht.
Mr Yeap said Aapico has reduced operating costs by changing to automated manufacturing, resulting in an increase in net profit margin to 3.8% from 2.3%.
Aapico's growth is in line with Thailand's car production, which rose by 6.2% to 933,380 vehicles in the first six months of the year.
Mr Yeap is confident the company can achieve 5% revenue growth to 16 billion baht in 2016.
Last year, Aapico posted revenue of 15.14 billion baht, down 1.2%. Net profit stood at 313 million baht, down 14.7%.
Mr Yeap said Aapico's manufacturing facilities in Thailand have enough capacity to serve the country's car production of up to 2.4 million units a year.
The company is running at only 60-70% of full capacity.
AH shares closed yesterday on the Stock Exchange of Thailand at 14.90 baht, down 30 satang, in trade worth 5.17 million baht.