Financials
Quarterly Report For The Financial Period Ended 30 September 2024
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Unaudited Condensed Consolidated Statement Of Profit Or Loss And Other comprehensive Income For The Year Ended 30 September 2024
Unaudited Condensed Consolidated Statement Of Financial Position as At 30 September 2024
Review of Performance
The Group recorded a quarterly revenue of RM150.2 million in the 3-month ended 30 September 2024 (“3Q2024”) as compared to RM180.7 million registered in the 3-month ended 30 September 2023 (“3Q2023”), representing a drop of 16.9%. For the nine-month financial period ended 30 September 2024 (“9M2024”), the Group’s revenue stood at RM492.3 million as compared to RM522.9 million in the nine-month financial period ended 30 September 2023 (“9M2023”), representing a decrease of 5.8%.
The Group’s revenue was mainly contributed by the ATE and FAS segments, constituting approximately 38.0% and 62.0% respectively for the 9M2024 period.
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 3Q2024 with a profit before taxation of RM21.4 million (3Q2023: RM37.5 million), representing a decrease of approximately 43.0% from the same period last year, mainly impacted by the lower ATE sales volume and the significant depreciation of the U.S. dollar against the Ringgit which has led to an unfavourable foreign exchange loss. However, the bulk of this foreign exchange loss remained unrealised as the foreign currencies have not been converted into Ringgit.
Accordingly, the Group closed its 9M2024 with a profit before taxation of RM84.3 million, representing a decrease of 23.5% from RM110.1 million recorded in 9M2023. The Group’s EBITDA (earnings before interest, tax, depreciation and amortisation) for the 3Q2024 stood at RM26.8 million (3Q2023: RM42.8 million), representing a decrease of 37.4%, while the Group’s EBITDA for the 9M2024 stood at RM100.0 million (9M2023: RM123.4 million), representing a decrease of 19.0%.
Basic earnings per share decreased from 3.30 sen in 3Q2023 to 1.66 sen in 3Q2024, while for 9M2024, basic earnings per share decreased from 9.62 sen achieved in 9M2023 to 7.18 sen.
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:
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Automated test equipment
Revenue in the ATE segment dropped by RM45.4 million in 3Q2024, to record at RM53.4 (3Q2023: RM98.8 million), a decline of 45.9% as compared to the same period last year. This was the result of the Group’s revenue growth from the automotive segment which has been impacted given the automotive industry faced severe headwinds since beginning of this year.
Within the ATE segment, the automotive segment continued to form the largest share of wallet, at approximately 64.0% for 3Q2024 (3Q2023: 74.4%). On 9-month basis, the automotive segment contributed 63.9% towards the ATE segment in 9M2024, as compared to 74.4% in 9M2023. The Group faced persistent headwinds in the automotive market, particularly in Western regions. While automotive electrification has accelerated in the last few years with the aim to achieve zero-emission targets, it has also become a key geopolitical tool among major economies. Key automotive markets such as the U.S. and Europe have announced its respective policies and tariffs towards Chinese-made electric vehicles (“EV”), resulting in greater market uncertainty and disruptions. Conversely, the EV market and supply chain in China have become highly competitive and disruptive, limiting the Group’s ability to fully capitalise on the expanding market locally in China. As a result, the Group’s revenue growth from the automotive segment has been impacted, despite the EV market’s strong fundamentals and long-term growth potential.
Revenue performance from the semiconductor industry segment was relatively stable in its contribution towards the Group’s ATE segment. During the 3Q2024, the semiconductor industry contributed 20.6% towards the ATE segment, as compared to 21.0% in 3Q2023. However, on 9M2024, this industry segment’s contribution showed a decrease to 11.8% as compared to 9M2023 of 18.8%, reflecting an overall industry softness since beginning of the year.
On the other hand, revenue contribution from the electro-optical industry showed a rebound as compared to 3Q2023, where this segment contributed 14.4% towards the ATE segment in 3Q2024, versus 4.4% for 3Q2023. For 9M2024, the share of wallet coming from this segment was at 23.5%, a significant increase from 6.6% recorded in 9M2023. The recovery of the Group’s electro-optical segment was largely driven by product cycle upgrades relating to the Group’s ambient light and its related smart sensor test equipment.
Overall, the Group’s ATE segment recorded a lower profit before taxation in 3Q2024 at RM4.3 million (3Q2023: RM19.6 million), along with a decrease in revenue. This was mainly due to the trade tensions and the lack of certainty at the macro front, particularly for the automotive segment.
The performance of the ATE segment is expected to remain subdued with this outlook potentially extending through the first half of 2025 given the lack of certainty at the macro front, particularly in the automotive segment. Despite these short-term challenges, the Group maintains an optimistic long-term outlook for its ATE segment, driven primarily by its diversified portfolio and involvement in key growth areas, particularly the increasing demand for advanced packaging in semiconductor manufacturing and the ongoing evolution of opto-electronic devices as the Group steers towards such high growth potential segment.
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Factory automation solutions
Revenue from the Group’s FAS segment registered a commendable growth of approximately 20.8% in 3Q2024 as compared to 3Q2023, coming in at RM106.6 million in 3Q2024 versus RM88.3 million in 3Q2023. The FAS segment has reached another milestone in 3Q2024 with its total revenue hitting RM311.8 million for 9M2024, an impressive growth of 76.3% as compared to RM176.8 million achieved in the same period last year. Such performance was attributable to the Group’s medical devices industry segment with a share of wallet coming in at 74.8% in 3Q2024 (3Q2023: 78.0%).
Other industry segments such as electro-optical segment and consumer and industrial products segment made up the remaining contributions to the FAS segment in 3Q2024, with each contributing approximately 7.3% and 7.1% respectively. All-in-all, the Group expects its FAS segment to continue to grow and contribute meaningfully in the near future, particularly the medical device segment as the industry progressively adopts factory automation solutions for operational efficiency, safety and adherence to stringent regulatory standards and the Group is actively pursuing such pace of change.
For the 3Q2024, the FAS segment recorded a higher profit before taxation at RM29.8 million as compared to RM25.6 million in 3Q2023.
Owing to technological disruptions and macrotrends such as reshoring, a global skilled-labour shortage, and environmental, social, and governance (ESG) efforts, industrial automation across the medical devices industry as well as other sectors will continue to sustain the Group’s FAS segment momentum.
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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 an increase in revenue to RM0.2 million in 3Q2024, from RM0.1 million recorded in 3Q2023. This segment recorded a loss before taxation of RM0.9 million in both 3Q2024 and 3Q2023 as it has yet to reach a scale.
Prospect
In the near term, the global macroeconomic environment is expected to remain murky and uncertain as the pace of economic recovery continues to fall short of expectations with heightened geopolitical risk. The prevailing weakness at the macro front is placing significant constraints on the Group’s ability to drive revenue growth. Weak demand across key segments, particularly in the automotive sector, where capital investments are sensitive to economic cycles and shifting government policies has prolonged the expected structural growth trend, leading to slow demand up-tick for the Group’s solution offerings. Additionally, aggressive pricing war in domestic China market continues to challenge margin preservation and expansion strategies for the Group’s ATE segment. Given these conditions, the Group expects sluggish demand to persist across its key segments for the remainder of 2024 and anticipates closing the financial year with flat revenue momentum.
Despite these short-term headwinds, the Group remains committed to addressing the challenges in the ATE segment while continuing to leverage growth opportunities within the FAS segment. Key initiatives are being undertaken to streamline operations and improve efficiencies which are critical steps for enhancing margins in future reporting periods. Simultaneously, the Group is working to strengthen its presence in high-growth industries and pursue long-term strategic initiatives that will position it strategically in the ever-evolving technology market, particularly given the current high demand for high-performance, high-bandwidth, and low-latency chipset used in Artificial Intelligence, data centers, high-performance computing and advanced networking. With a diversified product portfolio aligned with global trends, the Group aims to mitigate risks from sector-specific downturns while capturing emerging growth opportunities in line with industry trends. As it is, the Group’s new campus 3 facility, covering 720,000 sq.ft. mainly to support the growing needs of the FAS and medical devices segments, is nearing completion and expected to be operational by the first quarter of 2025.
As the Group navigates both opportunities and challenges, it remains focused on staying agile, innovative and customer centric. The Group is also honoured to be listed for the fifth time in Forbes’ “Asia’s Best Under a Billion” in August 2024, reflecting its strong track record.