Arank had acquired 55% of equity interest in Hong Lee Group (M) Sdn Bhd which its principal activities are engaged in manufacturing of aluminum based kitchen cabinet and glass cabinet. The group had a quite balance revenue with 60% local and 40% export.
Outlook on Aluminum Application on Automotive Industry
The improvement of technology, the strive to see better efficiency and reduction on CO2 had continue to push for better raw material input. One of the significant industry that will be heading for this big change will be the automotive industry.
Aluminum is well positioned as the best solution for weight reduction in heavy and medium duty truck and trailer market. This is in tandem with the EPA (Environment Protection Agency) to tighten the emission profile of the heavy duty truck and trailer market.
With the intensive development from Tesla in changing the automotive industry through a commercialized production on Electric Vehicle, lightweighting play an even more important role.
Every 1 kg of aluminum used in the car production will reduce the overall weight of the vehicle by 1 kg. For this reason, the application of aluminum are rushing into car parts such as engine radiator, wheels, bumpers, suspension parts, engine cylinder blocks, transmission bodies and body parts (hood door and frames).
A-Rank Berhad and Lb Aluminium Berhad Synergy
A-Rank Berhad and Lb Aluminium Berhad will be seeing further synergy in the foreseeable quarter after significant entry from low profile businessman - Datuk Leow Chong Howa, into A-Rank Berhad.
Datuk Leow surfaced as A-Rank Berhad substantial shareholder after acquiring 27.74% stake in April 2016. On the other hand, Datuk Leow already had 30.17% stake in LB Aluminium Berhad.
Arank is Malaysia largest manufacturer and supplier for aluminum billets, and resemble one of the leading suppliers of aluminum extrusion billets in Asia. On the other hand, Lbalum is the largest supplier of aluminum extrusion in Malaysia and too among the large player in South East Asia.
One would then easily imagine that Arank billets would be used by Lbalum to produce extrusion, forming a vertical integration in the supply chain. According to familiar industry sources, Arank will benefit greatly by becoming an upstream supplier to Lbalum, interpreting to regular steady orders, while Lbalum will enjoy a stable and competitive supply of raw material, of course with better pricing. Expanding vertically will prevent disruption in the supply of input material and reduce threats from suppliers, especially those with greater bargaining power.
Strong Aluminum come back
Aluminum had saw a break away from the long term down trend line that is plagued by oversupply, mainly from China. While most of the factory and production plant are totally shut down, restarting it will easily take up 4 to 6 months.
Aluminum is looking strong to push towards the range of 2,000 in the near term, raising great prospect to aluminum billets manufacturer like Arank in the coming quarters.