This article first appeared in The Edge Malaysia Weekly on March 28, 2022 - April 3, 2022

GIVEN the worldwide interest in electric vehicles (EV), Bursa Malaysia-listed Ta Win Holdings Bhd is scouting for opportunities in the EV space by leveraging on the capabilities of its subsidiary, Cyprium Wire Technology Sdn Bhd (CWT).

Ta Win group managing director Datuk Seri Ngu Tieng Ung says CWT is the first and only Malaysian company in Southeast Asia’s automotive supply chain with the capability of commercialising patented cross-linking treatment of electron beam irradiation technology.

“[What this means is] all cables produced for power and signal distribution systems, high tension cables, battery cables and other automotive PVC parts for automobile and electric vehicles will be sent to CWT’s plants for irradiation treatment utilising its proprietary cross-linked technology.

“CWT aims to set up three electron beam irradiation plants in Malaysia, located at our Alor Gajah Industrial Park in Melaka. We have commenced construction of the first electron beam irradiation plant and are on track to commission it in the second quarter of the calendar year 2022,” he tells The Edge.

He adds that the irradiation treatment by CWT uses working temperature of up to 300°C, from the typical 110°C to 150°C, which significantly extends the shelf life of the wire and cables from three to five years to up to 25 years, and provides better abrasion, fire, oil and acid resistance.

“These benefits provide CWT products with a significant competitive advantage, as polymer insulated and sheathed electrical wire and cable products are suitable for broader application in automotive, electrical and electronic, oil and gas and renewable energy industries, which require stringent requirements for cable and wire specifications.

“By supplying products of a higher technological content, the plant will also enable CWT to fulfil the needs of Malaysia’s electrical wire and cable industry to manufacture cross-linked wire and cable products locally. With such technology, local manufacturers will also be able to offer more advanced products to rival the standards currently possessed by other manufacturers internationally,” he says.

To fund the construction and development of the irradiation plant, the group had in September last year announced a private placement exercise to raise up to RM187.8 million.

“The proposed investment cost for the proposed establishment of three electron beam irradiation plants ranges from a total of approximately RM75 million to RM145 million, and will be funded via the private placement proceeds, existing cash and bank balances, bank borrowings and future fund-raising exercises to be undertaken if so required,” says Ngu.

While the application of irradiation technology is a new business segment for Ta Win, its bread and butter has always been the manufacturing of copper wires, copper rods and other copper products.

In November last year, the group forked out RM35 million in cash to acquire a piece of industrial land in Pulau Indah, Klang, to triple its total production capacity over the medium to long term, and to cater for the expected long-term demand growth for copper rods and wires.

“This will see the expansion of our production capacity from the existing 1,000 tonnes per month to 2,500 tonnes per month. The factory will also enable the group to expand its capacity further up to 4,000 tonnes per month, as a standby buffer for future expansion to cater to prospective larger orders from overseas customers.

“With this enhanced capacity to cater to current and future demand, this is expected to strategically position the group towards penetrating the growing EV battery market, unlocking value via our relationship with POSCO International,” he says. The expansion comes after the group announced that it had secured a contract from South Korea’s POSCO International Corp to supply copper rods and wires as well as other copper-related products.

Under the deal, Ta Win’s subsidiary Ta Win Industries (M) Sdn Bhd (TWI) will supply about 65,000 tonnes of the products for three years, starting with 10,000 tonnes in the first year.

Ta Win said then that TWI was expected to achieve an aggregated revenue of RM2.55 billion during the contract period based on the London Metal Exchange copper price of US$9,440 per tonne. The three-month contract for copper is now trading higher at US$10,315 per tonne.

Ngu says higher copper prices do not directly contribute or translate into the group’s earnings. “However, such changes offer optimism and motivation for the group to perform more efficiently and strategically to improve our earnings prospects.

“We [believe] copper prices will continue their upward momentum due to the increased demand for copper cables and wire harnesses, the prospective EV industry revolution globally, and ongoing disruptions in the copper supply chain caused by the Covid-19 pandemic,” he says.

On the performance of the group’s 32.5% associate Royce Pharma Manufacturing Sdn Bhd, which was acquired in 2020, Ngu says the management is optimistic about its capabilities and prospects to deliver on its two-year profit guarantee to Ta Win.

“The profit guarantee is on an accumulated and compounding basis for a two-year period from July 1, 2021, to June 30, 2023. The management of Royce is optimistic about its capabilities and prospects to deliver on its profit guarantee during this period due to prevailing government hospital contracts that it has in the pipeline.

“Royce is actively negotiating new contractual arrangements with private hospitals, clinics and pharmaceutical companies to produce and supply a wider range of healthcare product offerings to further strengthen earnings potential,” he says.

Ta Win returned to the black in the second quarter ended Dec 31, 2021, with a net profit of RM4.66 million — from a net loss of RM1.5 million — on higher sales volumes recorded and higher copper prices. Revenue for the period increased by 39% year on year to RM172.48 million.

This negated the net loss posted in 1QFY2022, resulting in the net profit of RM1.39 million in 1HFY2022 compared with the net loss of RM4.26 million a year ago.

It had been in the red for the past two financial years due to forex losses, as well as higher operational and finance costs.

As at Dec 31, 2021, Ta Win had net cash of RM31.4 million.

Via his interest in Timur Enterprise Sdn Bhd and other companies, Ngu has a 14% stake in Ta Win.  Ta Win chairman Datuk Yeo Boon Leong, who is also the executive chairman of Bursa Malaysia-listed cast acrylic products manufacturer Asia Poly Holdings Bhd, also holds a 14% stake in Ta Win.

Year to date, Ta Win shares have appreciated by 16% to 14.5 sen, giving it a market capitalisation of RM495 million.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.