JOTECH Holdings Bhd ( 7104), a maker of metal components and semiconductor parts, is venturing into the mining business as part of efforts to further diversify its revenue stream.

The company recently acquired an equity stake in a mining company with coal concession in Kalimantan, Indonesia.

Jotech executive chairman Datuk Goh Tian Chuan said the investment in resources industry will generate a new income stream which will serve to enhance its profits.

"It will, at the same time, diversify the risks of the group from reliance on the current core business in precision stamping," he said said.
The new investment is expected to contribute earnings to the group from financial year 2011 onwards.

Jotech recorded a net profit of RM8.8 million on the back of RM115 million revenue for 2009.

Shareholders` funds for that year grew by almost 10 per cent to RM102 million.

Goh said with the continuous focus on the regional expansion and development of a new core business in resources industry, Jotech is expected to continue its growth in profitability and shareholders value.

"Our regional expansion over the past years have started to pay off with subsidiaries in Indonesia and China contributing strongly to the group," he said.

Goh said contribution from overseas subsidiaries is expected to further increase, due to stronger economic recovery in these countries.

He said a capital expenditure budget of RM5 million has been allocated for capacity expansion in 2010.

"The group`s regional business together with the associated companies business in semiconductor and resources industry will spearhead the growth for the remaining period of 2010," Goh said.

For the three-month period ended March 31 2010, Jotech reported a turnaround from a net loss of RM1 million previously to a net profit of RM1.6 million.

The strong performance in the quarter was contributed mainly by the precision stamping operations in Indonesia, which posted improvements in revenue and profit, buoyed by continuous recovery in business.

Profit also came from investments in associate company, AIC Corp Bhd, a semiconducter player.

Revenue for the first quarter period was 56 per cent higher at RM30.9 million compared with only RM19.8 million in the same period previously. - The Business Times, Malaysia