PETALING JAYA: Unitrade Industries Bhd is in a sweet spot to fuel its earnings for financial year 2025 (FY25) powered by a surge in construction activities and the influx of data centres into the country.
Managing director Nomis Sim Siang Leng told StarBiz that Unitrade is well-positioned to capitalise on the positive outlook for the construction sector, which recorded a strong 11.9% expansion in the first quarter of 2024.
He said the outlook for the second half of the year was even brighter with the mega infrastructure works funded by the government expected to move into the implementation phase.
Some of these projects include the Penang light rail transit, Pan Borneo Sabah Phase 1 and the mass rapid transit line three or MRT3.
Furthermore, he said the allocation of RM180bil by the government for construction projects this year signals rising construction activities and bodes well for building materials distributors like Unitrade.
The company is one of the largest Malaysian homegrown wholesalers and distributors of building materials.
“Additionally, the group stands to benefit indirectly from the expected influx of data centre projects into the country, as the shell and core sections of data centres utilise standard building materials that form part of Unitrade’s existing portfolio of over 6,000 building material stock keeping units or SKUs.
“Beyond data centres, the unveiling of the National Semiconductor Strategy in May 2024 also calls for substantial investments into the semiconductor industry, that would include building new plants which is a boon for a player like us.
“Unitrade is poised to seize these opportunities, having established itself as a trusted partner with a proven track record of supplying pre-insulated pipes for the civil, mechanical and electrical segments of construction projects and semiconductor factories and data centre facilities for many years,” Sim added.
At the core of it, he said the essential nature of building materials throughout the lifecycle of buildings and infrastructures, from new construction to refurbishment, retrofitting and maintenance, ensures sustained demand for Unitrade’s products, and underpins the group’s position as a vital player in the construction industry.
For the financial year ended March 31, 2024 (FY24), the group reported a net profit of RM22.6mil on the back of a RM1.61bil revenue that included a RM17.1mil gain on disposal of assets. Profitability in FY24 was affected by a higher cost structure, as well as impairments on trade receivables and inventory.
Unitrade declared a first interim single-tier dividend of 0.44 sen per ordinary share in FY24. The first interim single-tier dividend of 0.44 sen per share translates to a dividend payout of RM6.9mil. The dividend was paid on April 5 to the shareholders of the company.
Sim said the improved financial performance in FY25 would also be driven by its new growth initiatives, contributions from the metal recycling segment, and the ability to meet the increased demand generated by rising construction activities.
Furthermore, he said the price of raw materials has broadly stabilised in FY24 as compared to the preceding year.
In addition, he said the recent acquisition of Intergreen Holdings Sdn Bhd to acquire a 51% stake in Intergreen Metals Sdn Bhd in January this year has paved the way for its entry into the metal recycling industry.
He said on top of that, the acquisition comes with a guaranteed net profit totaling RM45mil by Intergreen over three financial years, which would further strengthen the group’s earnings.
As for its solar business, Sim said the expected surge in solar installations would greatly benefit Unitrade as a wholesale distributor of solar systems, positioning it to capitalise on the expanding market demand for solar equipment.
“The solar market is anticipating a surge in activity, along with a significant increase in solar engineering, procurement, construction and commissioning jobs.
“This growth is primarily driven by government initiatives like the Corporate Green Power Programme with an 800 megawatt (MW) capacity and a scheduled commercial operation date by the end of 2025.
“Additionally, the upcoming large-scale solar five (LSS5) programme, the largest LSS programme thus far with a two gigawatt capacity will further drive solar installations with operations scheduled to commence in 2026.
“Beyond large-scale projects, the net energy metering scheme has been allocated with an additional quota of 400MW. Furthermore, the Solar For Rakyat Incentive Scheme or solaRIS is offering attractive rebates (RM1,000 per kilowatt alternating current (kWac) to RM4,000 per kWac) to incentivise residential solar adoption, a sector with significant untapped potential,” he added.
To further strengthen its solar power offerings, Unitrade in April this year entered into a collaboration agreement with Huawei Technologies (M) Sdn Bhd and JJ-LAPP (M) Sdn Bhd.
The partnership facilitates the distribution of Huawei Digital Power-Smart PV solutions across residential as well as commercial and industrial sectors.
Looking ahead, Sim said Unitrade has plans to introduce solar ownership plans, offering customers and its employees affordable and flexible financing options to reduce the upfront cost of solar panel installation.
This initiative is expected to further stimulate demand for Unitrade’s solar products, he noted.
