31-05-2006:
Casino News Source: http://www.theedgedaily.com
By Isabelle Francis
Ho Wah Genting Bhd (HWGB) is betting on its Cambodia casino to break even in the next two years riding on improved operational efficiency. It also expects higher copper prices to boost its manufacturing division.
Speaking to reporters after its AGM in Kuala Lumpur on May 31, its group executive chairman Goh Sin Huat said that this two-pronged approach was expected to help the company swing into the black.
“We have strategies in place. We would like to see how we could diversify synergistically. The (newly acquired) magnesium business is one of the ways to consolidate our position,” he said.
For the financial year ended Dec 31, 2005, the casino operator and copper wire manufacturer's net loss narrowed to RM46 million from RM66.58 million in the previous year.
Its chief executive officer and managing director William Teo said it was on track in executing the five-year plan for its casino operations in Poipet, Cambodia.
“We actually made a profit in the first year. There were external factors (which affected the casino business) that were not within our control such as the political and economic environment.
“We hope to break even after five years (from the start of operations),” he said, adding that the Poipet casino was now in its third year of operations.
Teo said copper wire and cable production would remain its core business and was expected to be reap better profit margins thanks to higher copper prices.
He added that copper prices more than doubled to over US$8,000 (RM29,028) now from US$3,000 per tonne last year.
It was reported that prices for copper, used in construction and electronics, reached an all-time high of US$8,800 on May 11, having jumped more than six-fold since late 2001 on strong demand in China and India, supply disruptions and relentless fund buying.
“Our main competitor is China and with the appreciation of the yuan, they would see an increase in (production) cost. With that, our products would get more competitive.
“As long as supply is shorter than demand, the price could go up further. As a mine owner and producing copper, I could certainly see a doubling or tripling of profits (via higher selling prices, lower production cost),” he said.
Teo said the company foresaw a higher demand of commodities from fast developing economies such as China, India, and the Middle East. The United States, he added, would however remain its major client for copper. Its clients include GE, Home Depot, Coleman and ACE Hardware.
He said HWGB's production capacity was running at 50% or 400,000 tonnes of copper, adding that it could be “easily increased” by another 40% to 50%.
On its newly acquired magnesium production business, via the purchase of 51.4% stake in Commerce Venture Manufacturing Bhd, Teo expected the operations to start in the next 18 to 24 months, with an initial production capacity of 15,000 tonnes of magnesium per annum.
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