By Ooi Tee Ching
KUALA LUMPUR: Poh Kong Holdings Bhd is hopeful of doing better this year, thanks to rising gold prices and improving consumer spending.
Poh Kong executive chairman and group managing director Datuk Choon Yee Seiong said gold had risen 13.5 per cent from an average of US$1,200 per ounce, as at end-2016, to about US$1,300 per ounce in December 2017.
“Today, gold is trading at around US$1,340 per ounce. Generally we see it rising further to between US$1,350 and US$1,400 in the short-term,” he said.
“Hopefully, by year-end, it will reach US$1,500 per ounce,” he added.
Choon explained gold is on the upward trend as global demand is outpacing supply. The weakening US dollar against the ringgit should translate to better margins for Poh Kong.
He was speaking to reporters after the company's shareholders' meeting here today.
Also present were Poh Kong executive director Ermin Siow Der Ming, marketing manager Elizabeth Choon, group accountant Koh Sze Haw, corporate affairs, administration & human resources head Margaret Hon and business development manager Edison Choon.
At press time, gold futures on the COMEX division of the New York Mercantile Exchange was trading at US$1,340 dollars per ounce, reaching a new four-month high.
Gold and the dollar typically move in opposite directions. A weaker dollar can boost the appeal of gold as an investment. When the dollar gains, gold tends to drop.
The US dollar has weakened broadly against major currencies, including the ringgit, pushing up the prices of gold significantly in recent months.
This year many economists forecast Malaysia's economy to grow at between four and five per cent.
"Typically gold jewellery demand tend to grow in tandem with the GDP (gross domestic product) growth. We're hopeful of performing better this year,” said Margaret Hon.
On business expansion, she said Poh Kong has set aside RM15 million in capital expenditure for the current year ending July 2018 to add on three stores – two of which are at shopping malls in Johor.
“Twelve of our 94 outlets are in Johor, including the two new ones. We see very positive results in Johor, partly due to customers from Singapore who have higher purchasing power,” Hon said.
Elizabeth Choon said Poh Kong's initiative to diversify its sales channel through online platforms like Lazada and 11street, since 2012, is showing positive results.
"We'll announce another collaboration with an e-commerce platform in the second quarter of this year," she added.