Scientex grabbing the bull by its horns

By ZAIDI ISHAM ISMAIL
editor@dagangnews.com

KUALA LUMPUR Sept 17 - During these difficult times, companies either adapt and adopt or "tutup kedai."

Some firms chose to reinvent themselves by converting to become vaccine producers or rubber glove makers - a huge paradigm shift from their previous businesses.

Some companies just accept the fact that things are not getting any better soon and just accept reality.

Such is the case for Scientex Berhad, which realised that COVID-19 is not going to subside in the near horizon.

To arrest any decline, Scientex decided to grab the bull by its horns by privatising its 47% subsidiary Daibochi Bhd.

Daibochi has been fledgling of late due to the slow business brought about by COVID-19 which is reflected by its waning share prices.

Its parent Scientex decided enough is enough and took matters into its own hands by announcing to Bursa Malaysia its plans to privatise Daibochi last week.

In its research note, CGS-CIMB thinks that the reason why Scientex is taking Daibochi private stemmed from the latter’s short and long term pitfalls. 

"We had already seen Daibochi failing to grow its 2021 sales and core net profit is soft due to shipping constraints in the wake of the COVID-19 pandemic. 

Increasing logistics and raw materials costs, meanwhile, gradually ate into its quarterly pre-tax margins," CGS-CIMB told investors.

The packaging firm said taking Daibochi private will also put Daibochi in a better position to meet the stringent requirements of multinationals and local prominent brands.

The multinationals are increasingly reliant on suppliers that are equipped with good risk management and business contingency plans with the capacity and capability to provide reliable, dependable, and quality products on a consistent basis.

Scientex chief executive officer Lim Peng Jim said it aptly.

"The challenges presented by COVID-19 highlight the growing need for companies to be agile to react fast to external impacts.

Scientex has demonstrated that it is just a matter of companies adjusting themselves to the current pandemic situation which should be on the thinking cap of every chief executive officer.

Granted it is a herculean task but it is something needed to be done until COVID-19 simmers down.

Maybe it's too late, maybe it's not but perhaps struggling companies especially Government-linked firms could emulate Scientex.

By doing so, the long term survival of the company can be preserved for the benefit of the shareholders.

Companies must try their best not to bleed financially and ride the pandemic to the best of its ability. - DagangNews.com