Poh Kong: Golden Opportunity

GOLD bars are becoming an important investment product as investors take advantage of the rising price of the precious metal.

The market thinks the price of gold is set to hit a record high of RM200 per gm over the next five to seven years from RM84 per gm currently, as demand outstrips supply worldwide.

While the higher price of gold will be a concern for some, it will augur well for Poh Kong Holdings Bhd, Malaysia's largest jeweller, as its revenue is set to rise on the back of higher sales of gold bars here.

"Price of gold could rise over the next few years and locals are buying gold bars as an investment. This is a new trend here," executive chairman and group managing director Datuk Eddie Choon Yee Seiong said.

Poh Kong started selling gold bars in 2003 and the business has picked up, contributing one to two per cent to its yearly sales.

For its fiscal year ended July 31 2006, Poh Kong posted a net profit of RM26 million on the back of a revenue of RM372.1 million, attributed by higher gold prices, and sales of gold bars and jewellery.

"Revenue may rise, also contributed by the new brand of pearl jewellery we are selling at our flagship outlet in Petaling Jaya," Choon told Business Times after a media preview of the exclusive luxury pearl jewellery collections from the house of Schoeffel in Petaling Jaya yesterday.

Poh Kong is the exclusive distributor for the Schoeffel cultured pearls from Germany with prices ranging from RM1,000 a piece to above RM100,000.

Choon believes the market for pearls will also pick up as there is strong demand here.

He also said Poh Kong is planning to venture abroad by setting up outlets in selected countries in a few years.

"We haven't decided which countries we want to operate in as our plan is still in the preliminary stage. However, we do plan to invest some RM30 million to open as many as 10 new outlets across Malaysia, every year," he said.

Poh Kong has 74 retail outlets nationwide and targets to have more than 80 by year-end.

Choon said it is also planning to have more franchise outlets, targeting at least 10, over the next five years.

It now has one franchise outlet in Kota Kinabalu, Sabah.