PETALING JAYA: Johore Tin Bhd’s tin and dairies manufacturing plants have remained operational during phase one of the National Recovery Plan albeit with a reduced workforce of 60%.

       As a result, the productivity of the plants is expected to be lower during the period despite efforts to prioritise usage of faster and more efficient equipment.

       The group’s sales visibility, however, has improved with more orders from Africa and countries with less stringent movement controls, said TA Securities, which recently attended an analysts briefing hosted by Johore Tin.

       “We also understand that some customers, specifically African customers, took a wait-and-see stance on procurement previously when freight charges surged abruptly.

       “But many have now begun placing new orders as their inventory levels have started running low, ” said the research house in its company update report.

       Johore Tin, which will soon-be-known as Able Global Bhd, is also in the midst of obtaining manufacturing quality certifications such as HACCP, FSSC 22000 and others, which are the requirements imposed to start selling to export markets on a big scale.

       The group’s tin packaging and condensed milk lines at its joint-venture (JV) plant in Mexico are operational and have been commercialised with small output produced for domestic sales in the country.

       The commissioning efforts have been shifted towards the evaporated milk line, which is expected to be completed within one to two months.

       According to TA Securities, Johore Tin is hopeful to receive the necessary manufacturing quality certifications for the JV plant by end-2021.

       The group also planned to ramp up production for exports to central America, south America and the United States.

       In the first year of operation at its JV Mexican plant, Johore Tin aims to achieve about 30% utilisation of the 120, 000 tonnes production capacity.

       In another development, Johore Tin had said it needed shareholders’ approval for its proposed diversification into property business.

       It recently proposed to acquire 297.5 acres freehold agriculture land in Banting, Selangor for RM169.8mil.

       TA Securities pointed out that the group was preparing a circular to announce details of its proposed plan for property development activities.

       “Thereafter, an EGM would be convened to obtain shareholders’ approval on the proposed diversification and land acquisition.”

       At this juncture, some 208.3 acres of the land would be allocated to the property development segment if “the proposed diversification is approved.”

       Given the close proximity to Port Klang, the group intends to develop industrial and commercial properties on the land.

       In addition, the group is open to selling part of the land, either as agriculture land or industrial land.

       “If the approval from shareholders is obtained for the proposed diversification, the land acquisition is expected to be completed in the fourth quarter of financial year 2022, ” said TA Securities.

       Johore Tin derives about three-quarter of its earnings from the food and beverage segment through manufacturing and trading of dairy products.

       TA Securities has maintained a “buy” call on Johore Tin with an unchanged target price of RM2.30 per share based on 15 times price earnings ratio (PER) on F&B earnings and eight times PER on its tin manufacturing earnings for calendar year 2022.