KUALA LUMPUR: Leform Bhd's ongoing project involving the West Coast Expressway is expected to strengthen its position in the construction industry further and drive future earnings growth.
Since its listing on the ACE market in November last year, the company has secured four contracts for supplying and installing guardrails on different sections of the West Coast Expressway.
Managing director Law Kok Thye said the four contracts, totalling approximately RM38.7 million, are expected to contribute positively to the revenue, earnings, and net assets of Leform for the financial years ending December 31, 2023, and 2024.
"We have ample room to supply the guardrails, which are already being manufactured.
"As there are four ongoing contracts, we will liaise with all clients to ensure smooth production and on-time completion.
"We will also purchase the raw materials in advance to ensure sufficient materials are available for production, he told New Straits Times, adding that these contracts will serve as a track record for the company to procure more contracts in the future.
Leform manufactures and trades guardrails and steel products, with raw materials accounting for over 90 per cent of the company's total sales.
Guardrail projects depend on the government's plans to expand connectivity within the country.
Currently, guardrail is less than 10 per cent of LeForm's revenue.
The company's main products are still steel pipes, and the policy is to diversify the sectors it serves to manage the risks.
"In terms of our position in the guardrail industry, we are still at the growing stage as we plan to capture more market share," Law said.
He said guardrails are products created per international design standards, a product that LeForm manufactures.
Nevertheless, LeForm has the expertise to accommodate conceptual demands should clients have any modifications or preferences.
Law also said the volatility of steel prices, one of the key risk factors for LeForm's business, would impact the company's margin.
"Given this volatility, the company closely monitors raw materials' pricing for procurement purposes.
"Our selling prices are based on the market price. We closely monitor the price and adjust it every week if required.
"We will pass on the fluctuation of raw materials to our customers. We also used a systematic approach to average our inventory costs," Law said further.
He said that based on the Department of Statistics, raw material prices have started stabilising, and the government's import duty exemptions for raw materials have also helped reduce costs.
Further, he said the domestic construction sector should see some key national projects rolled out as raw material prices have stabilised coupled with labour shortages' easing.
"We are currently in discussions on other future projects. In general, the market is relatively quiet.
"However, we are looking for an optimistic performance by year-end. We are confident the market will pick up by year's end as more projects come on stream.