BUTTERWORTH (Jan 22): Roofing product maker Astino Bhd expects revenue to drop between 8% and 10% this financial year ending July 31, 2016 (FY16) from a year ago due to weak demand.

Its executive chairman and chief executive officer Ng Back Teng said the Penang-based group saw international and local orders slump by 10% for the November–January quarter and expects demand to continue to fall through the remaining quarters.

"We are preparing for bad times … The drop in sales orders is expected to translate to an 8% to 10% decrease in revenue in FY16, but we hope to maintain the same profit margin as FY15," he told reporters after the group's annual general meeting today.

Astino's net profit fell 10.9% to RM5.08 million for the first financial quarter ended Oct 31, 2015 (1QFY16) from RM5.7 million a year ago, on the back of a 4.7% drop in revenue to RM115.41 million from RM121.06 million in 1QFY15. The weak 1QFY16 performance was attributed to a decrease in overseas market demand.

Ng said in order to maintain its profit margin, the group has halted all new investments and reduced overhead costs by putting a freeze on new hires and overtime.

"There is (also) no need to operate the machines if there are lesser orders," he added.

The group has also reduced its imports of raw materials from Taiwan and South Korea by 10% from 20% previously amid weakness in the ringgit.

Astino's core business is producing roofing products, which account for about 90% of total revenue. However, it plans to expand its products to include agro-house multi-system fabricated units and greenhouse units for the local and overseas markets.

Ng said the agro-house units made for poultry farms contribute about 8% to the group's revenue while the greenhouse unit sector was about 1% only.

"We would like to expand into the two segments in Vietnam, the Philippines and Indonesia in two to three years. We would not do it in this financial year (FY16) because we need to be mindful of our cost," he added.

Going forward, Ng said competition is likely to get fiercer due to the weak domestic demand, adding that much of its focus will be to ensure it maintains its market share.

"If there is keen competition, our profit margin would drop. Therefore we must continue working hard to serve our existing customers," he said.

Astino shares closed 2.5 sen or 3.62% lower at 66.5 sen today with 16,600 shares changing hands, giving it a market capitalisation of RM182.15 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)