Ge-Shen Corp Bhd CEO Louis Lau Puong Kiet (4/7/2024). —AZHAR MAHFOF/The Star
PETALING JAYA: Ge-Shen Corp Bhd
stands to gain from the escalating trade tensions between the United States and China.
Chief executive officer Louis Lau Puong Kiet said the tariff hikes slapped on Chinese-made products by the United States have led to a direct increase in the number of enquiries for its products.
“With the trade relations in its present condition, I think it will only bring good news for players in this field. So now we are looking into how we can secure all these potential customers,” told StarBiz.
Lau said medical goods will be one of the benefitting sectors for Malaysian companies.
This was following an announcement by the United States in May to impose a hike in tariff, ranging from 25% to 50%, on certain medical devices produced in China.
“I think that 50% is a huge figure. Given the productivity and cost structure in Malaysia, there has always been benefits (for clients) to come to Malaysia, even at a tariff of 10%.
“But with 50%, I think a lot of US companies do not need to think any further (to get services in Malaysia).”
He added that Mexico and Eastern European countries also stand to benefit from the tariff hike.
“So our real competition is not in Malaysia or China but actually these other regions (for example, Mexico and Eastern Europe), where the governments are trying to bring business into their countries as well.”
He said Mexico has the advantage in terms of transportation costs, which is much cheaper owing to its close proximity to the United States.
Lau said Ge-Shen is constantly working on its ability to remain competitive, be it domestically or internationally.
“Hence, as part of the global supply chain, we have to ensure that the total cost or value that we bring to our customers will remain valuable to them.
“We will continue to control costs to ensure that we are able to remain competitive in the global scene.”
Moving forward, Lau said the group is optimistic about its performance for the second half of the year.
Acquisition activities were one of the main contributors behind its optimism for the remainder of the year.
In early March, to bolster its position in the electronic manufacturing services (EMS) industry, Ge-Shen had offered to pay RM48mil for a 40% stake in EMS firm Local Assembly Sdn Bhd.
A few days later, the group proposed to acquire 60% stake each in Amity Research & Development Sdn Bhd and Amity Technical Services & Consultancy (M) Sdn Bhd for RM13.5mil cash to strengthen its position in the E&E sector.
“We are looking to complete the acquisition of these companies by the second half of this year. That will quickly translate into better revenue and profitability on our profit and loss statement,” Lau said.
He said Ge-Shen is looking towards a couple more mergers and acquisitions (M&As).
“The board is very aggressive as we are looking to continue growing the business. So, we are considering a couple of potential M&As which may be announced in the next one or two months.”
Ge-Shen reached an all-time high of RM4.47 in May 2024. The counter closed at RM3.87 last Friday, giving it a market capitalisation of RM487.13mil.
