Financials

Quarterly Report For The Financial Period Ended 31 December 2023

Financials Archive

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Unaudited Condensed Consolidated Statement Of Profit Or Loss And Other comprehensive Income For The Year Ended 31 December 2023

Unaudited Condensed Consolidated Statement Of Financial Position as At 31 December 2023

Review of Performance

The Group recorded a quarterly revenue of RM169.0 million in the 3-month ended 31 December 2023 (“4Q2023”) as compared to RM147.7 million registered in the 3-month ended 31 December 2022 (“4Q2022”), representing an increase of 14.5%. For the entire financial year ended (“FYE”) 31 December 2023 (“12M2023”), the Group’s revenue stood at RM691.9 million as compared to RM600.6 million in the FYE 31 December 2022 (“12M2022”), representing an increase of 15.2%.


The Group’s revenue derived mainly from the ATE and FAS segments, with each contributing approximately 65.4% and 34.6% respectively of the Group’s total revenue in FYE 31 December 2023.


The below outlined the revenue of the respective operating segments where elements of inter-segment transactions were included.


The following table sets out revenue breakdown by customers' segment for the Group:


The Group closed its 4Q2023 with a profit before taxation of RM31.3 million (4Q2022: RM36.9 million), representing a decrease of approximately 15.3%. The Group closed its 12M2023 with a profit before taxation of RM141.4 million, representing an increase of 7.1% from RM132.1 million recorded in 12M2022. The Group’s EBITDA (earnings before interest, tax, depreciation and amortisation) for the 4Q2023 stood at RM35.8 million (4Q2022: RM40.0 million), representing a decrease of 10.7%, while the Group’s EBITDA for the 12M2023 stood at RM159.2 million (12M2022: RM142.9 million), representing an increase of 11.4%. Basic earnings per share fell from 3.20 sen in 4Q2022 to 2.91 sen in 4Q2023, while for 12M2023, basic earnings per share increased from 11.58 sen achieved in 12M2022 to 12.53 sen in 12M2023.


Performance of the respective operating segments which includes inter-segment transactions for the current quarter as compared to the previous corresponding quarter is analysed as follows:

  1. Automated test equipment

    Revenue in the ATE segment dropped marginally by RM2.8 million in 4Q2023, to record at RM94.0 million (4Q2022: RM96.8 million), a slight decline of 2.9% as compared to the same period last year. This was the result of the timing in revenue recognition of certain projects during the quarter.


    Within the ATE segment, the automotive segment continued to form the largest share of wallet, at approximately 61.1% for 4Q2023 (4Q2022: 69.3%). On 12-month basis, the automotive segment contributed approximately 71.7% towards the ATE segment in 12M2023, marking a significant growth from 58.4% as recorded in 12M2022. This year saw the Group’s wafer level burn-in tester for Silicon Carbide (SiC) and its back-end assembly and test solutions for the hybrid pack power modules continued to drive growth in the automotive segment. Throughout the year, the Group witnessed significant expansion in its customer base and experienced increasing momentum in engagements with prospective new customers. Overall, the Group’s decision to diversify and establish a presence in the automotive segment has proven fruitful with the revenue trajectory of this segment exhibiting a consistent upward trend. With 2023 surpassing the RM300.0 million milestone, the revenue momentum from the automotive segment has grown by more than sevenfold since 5 years ago. The Group’s automotive industry segment will continue to dominate the Group’s ATE segment in the near future on the back of the structural automotive electrification trends.


    Amidst the recent headwinds faced by the semiconductor industry, revenue performance from this segment surprisingly grew in its contribution towards the Group’s ATE segment. During the 4Q2023, the semiconductor industry contributed 32.9% towards the ATE segment, a jump from 14.8% recorded in 4Q2022. For 12M2023, this industry segment contributed 21.7% as compared to 19.9% for 12M2022. Over the past few years, the Group’s ATE test solutions seemed to be well anchored and supported in the semiconductor industry fueled primarily by the growth of integrated chips and fifth generation higher performing, ultra speed semiconductor content.


    Revenue contribution from the Group’s electro-optical industry remained subdued, with this industry segment contributing 5.7% towards the ATE segment in 4Q2023, versus 15.2% for 4Q2022. For 12M2023, the share of wallet coming from this segment was at 6.4%, a significant decrease from 19.0% recorded in 12M2022. The Group’s electro-optical segment has yet to witness a recovery given the notable slowdown and saturation in the global smartphone market stemming from the reduced consumer spending habits to invest in new smartphones due to lack of significant advancements in smartphone technology.

    Overall, the Group’s ATE segment recorded a lower profit before taxation in 4Q2023 at RM17.4 million (4Q2022: RM21.4 million). This was mainly due to lower sales recorded and a higher net loss on foreign exchange in 4Q2023 as compared to 4Q2022. However, for 12M2023, ATE segment recorded a higher profit before taxation of RM104.9 million as compared to RM94.7 million in 12M2022.


  2. Factory automation solutions

    Revenue from the Group’s FAS segment registered a strong double-digit growth of approximately 47.2% in 4Q2023 as compared to the 4Q2022, registering RM78.7 million in 4Q2023 versus RM53.5 million in 4Q2022. The FAS segment growth was largely propelled by the substantial contributions from the medical devices industry, with its contribution coming in at 66.3% in 4Q2023 versus 62.7% in 4Q2022. With the global medical automation market estimated to grow at a Compound Annual Growth Rate of 7.8% for the 2023-2033 period, this business segment has tremendous market opportunities for the FAS segment to further position itself for a potentially multibillion-dollar market size.


    Other industry segments’ contribution for the FAS segment in 4Q2023 include consumer and industrial products segment and electro-optical segment, with each contributing approximately 20.9% and 11.7%, respectively. Overall, the FAS segment has shown a sustained upward trajectory growth in the last few years and this segment is strategically positioned to seize more opportunities as global manufacturing demand higher precision automation with better productivity and quality. As FAS with its i-ARMS solutions diversify across different industries, this segment is poised for a sustained expansion and performance.


    For the 4Q2023 period, the FAS segment recorded a lower profit before taxation at RM20.3 million as compared to RM23.8 million in 4Q2022. In 4Q2022, there was a waiver of other payable which was non-recurring in nature and a high amount of net reversal of ECL on receivables. However, for 12M2023, the FAS segment recorded a higher profit before taxation of RM55.4 million, a jump of 10.5% from RM50.1 million recorded in 12M2022.


  3. Smart control solution system

    The products and solutions in this segment entail project management, smart building solutions and trading of materials.


    The smart control solution system segment recorded a slight decrease in revenue to RM0.2 million in 4Q2023, from RM0.3 million recorded in 4Q2022. For 12M2023, revenue from the smart control solution system segment stood at RM0.8 million (12M2022: RM0.5 million). This segment also recorded a higher loss before taxation at RM0.8 million in 4Q2023, as compared to RM0.7 million in 4Q2022. Meanwhile loss before taxation in 12M2023 for this segment registered at RM3.1 million, similar with 12M2022.


Prospect

“Every storm runs out of rain, every dark night turns into day”

The embodiment of resilience, adaptability and perseverance was once again demonstrated as the Group adeptly navigated the cyclical nature of business environment, challenges and adversity in 2023. Throughout the year, the persistent global macroeconomic challenges have proven tenacious, with the confluence of mounting interest rates, inflationary pressure and the escalating geopolitical tensions taking center stage in shaping the global economic landscape, rendering the business environment both volatile and challenging. In addition to these challenges, trade policies uncertainties, trade protectionism and tariff disputes between major economies have further complicated the international business environment for companies operating on a global scale. Amidst these macroeconomic concerns, the rapid pace of technological advancements and digital transformation have presented a silver lining. Against this backdrop, the Group proactively adopted a dynamic and forward-thinking approach in prioritising innovation, fostering agility in response to the unrelenting pace of geopolitical complication landscape in a technological developments world, and positioning itself strategically to remain competitive and relevant.


As the Group approaches the year 2024, there is an expectation that the delicate nature of these macroeconomic factors will persist, indicating a sustained vulnerability and fragility in the economic landscape. However, as challenging as it can be and barring any unforeseen circumstances, the Group endeavours to achieve yet another year of continuous business growth with a steadfast focus on high growth segments. Notably, the medical devices segment currently commands the largest share of the Group’s current order book and this segment will continue its strong growth momentum in 2024, primarily propelled by the widespread adoption of automation in medical manufacturing. Having consistently led the Group’s revenue for two consecutive years, the Group’s order book remains fortified by contributions from the automotive segment. This is anchored by the Group’s comprehensive range of product solutions within this segment. With the Group holding a robust presence in regions like Europe and the United States, other emerging growth countries like Taiwan and Japan are seen to be the next promising areas poised for growth, particularly in the context of automotive electrification. The Group anticipates that such developments in these markets will yield positive outcome and further contribute to the Group’s revenue in its automotive segment. While the Group experiences favourable momentum in both its medical and automotive segments, contributions from its other industry segments remain comparatively modest.


In recent years, the Group has been strategically directing investments towards various facets of medical technology (“MedTech”), encompassing automation as well as the design and manufacturing of singleuse medical devices. A notable trend in the current market environment is the prominence of MedTech and life sciences where the pervasive influence of technology within the medical industry has instigated a remarkable surge in technological innovation with automation at the forefront of this revolution. The adoption of automation in MedTech is now prevalent, given the intricate nature of the medical device manufacturing process. The inherent need for precision and accuracy in the production of medical devices makes automation a cornerstone for achieving heightened process efficiency and consistency. In tandem with this pronounced trend in the medical industry, the Group is strategically positioned to capitalise on these opportunities through its FAS segment and its subsidiary company, Pentamaster MediQ Sdn. Bhd. by elevating its presence and operational footprint in the medical industry with the aim to propel the growth trajectory of its medical industry to new heights.


The Group’s efforts in geographical diversification has proven beneficial against the backdrop of prevailing geopolitical landscape marked by a discernible trend towards deglobalization and localisation. This current shift involves establishment of new manufacturing facilities and expansion of new ones with the aim to foster greater self-reliance in semiconductor and electronics supply chain. With the Group’s recent establishment of its global footprint in Germany in March 2023, the Group is positioned to enhance its presence in Europe to further build its automotive and MedTech segments in this region. The Group’s office in Germany currently serves as a hub for research and development activities besides providing technical sales support for better customer engagement. Given Germany’s prominent status as a hub for the automotive industry, the Group’s expansion is strategically positioned to broaden its customer base for power module semiconductors. Additionally, the Group’s Europe presence will also serves its venture into the MedTech field, with specific focus on countries such as the United Kingdom, Poland and Ireland. Currently, contribution from Europe accounts for less than 10% of the total Group’s revenue which indicates a substantial growth potential within the region.


Recognising the integral role of sustainability in today’s contemporary business practices and in alignment with the Group’s dedication in fostering a sustainable environment, the Group will continue to intensify its efforts in advancing its Environmental, Social, and Governance (“ESG”) initiatives through the development and implementation of a set of comprehensive action plans. These action plans encompass a diverse range of material areas covering, among others, emissions, climate change, health and safety, employment and labour practices, diversity, supply chain management and overall governance as well as compliance matters. Within this framework, the Group is set to expand its ESG working group, a dedicated team tasked with planning, executing and overseeing all sustainability-related strategies, goals and policies. In essence, the Group aims to mold a sustainable future where responsible business practices are to seamlessly integrate into its day-to-day business operations. Such effort signifies the Group’s commitment to not only meeting regulatory requirements but also proactively contributing to a more sustainable and resilient global business environment.


To conclude, the Group maintains a keen awareness of the prevailing economic fragility and is committed to addressing it with a proactive and strategic approach which center on high growth industries. 2024 is another year where the Group remains cautiously optimistic with its focus on seizing opportunities to broaden its revenue streams. In addition to allocating resources to areas with significant potential, the Group will continue to place a strong emphasis on continuous innovation and improvement in its design and operational processes for its products and solutions. With the Group advancing through the second half of its 4-year plan in its “Grand Roadmap & key focus 2022-2025”, it is imperative for the Group to expedite the construction of its campus 3. To this end, phase one and phase two featuring the construction of two manufacturing plants, spanning approximately 720,000 sq.ft. are in progress concurrently with a targeted full completion set for the first quarter of 2025. Anticipating the completion of the third plant, the Group aims to mark a significant milestone.