KESM out to maintain strong sales momentum

KUALA LUMPUR: Chip-testing company KESM Industries Bhd, which surpassed its RM300 million sales target last year, aims to maintain the sales momentum for its current financial year ending July 31, 2018 (FY18).
KESM provides burn-in, testing and electronic manufacturing services for the semiconductor industry. Burn-in is a process to detect early failures in semiconductor devices, which are used mostly in cars and personal computers.
For FY17, the group’s sales improved 18% year on year to RM338 million as a result of higher demand for burn-in and test services.
“We exceeded our sales target last year, and if you look at the track record that we have, we will try to keep up with that rate,” its executive chairman and CEO Sam Lim told reporters after the group’s AGM and EGM today.
KESM achieved sales of RM285 million in FY16 and RM263 million in FY15.
Asked about the group’s capital expenditure (capex) plan for FY18, Lim declined to comment on the amount, saying it will not be less than last year’s. It is understood that the group allotted RM140.2 million for capital investments in FY17.
Nevertheless, he said the group’s capex this year will mainly be used to enhance its existing plants, upgrading them into “smart factories” in order to improve the quality of KESM’s products and to test more complex semiconductors.
“We just started (the initiative) recently and it will be accelerated to our factories in Kuala Lumpur and China, which will bring even better value to our customers.
“Smart factory is beyond automation. It provides manufacturing information online, such as quality and production volumes. And those information will be given to the management to analyse and decide on what to do,” he said.
The group has three semiconductor testing plants, one each in Kuala Lumpur, Penang and Tianjin, China.
Besides that, Lim said, the group is planning to increase its investments in automation to enhance the production process by increasing the level of automation.
Other than that, the group’s strategies this year include increasing its technical resources, developing programmes to optimise production process and improving product quality.
On the strengthening of the ringgit against the US dollar, Lim noted that the group is not affected by the currency movement at the moment.
For the first quarter ended Oct 31, 2017 (Q1FY18), the group’s net profit increased 13.6% to RM11.38 million, from RM10.01 million in the previous corresponding quarter. Revenue for the quarter grew 13.2% to RM90.7 million, against RM80.1 million previously.
On Bursa Malaysia today, KESM’s share price, which has been on an uptrend since last August, fell 28 sen or 1.31% to RM21.02 with 27,300 shares traded. The stock has climbed more than 50% in the past five months.