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Wednesday, July 4, 2018

FoundPac expects contract value to increase by at least 10%

Wednesday, 4 Jul 2018
by david tan

GEORGE TOWN: FoundPac Group Bhd expects the contract value of its high-precision engineering components to increase by at least 10% over the next two years to about RM40mil, riding on the global growth of home appliance products and semiconductor equipment spending.

Group chief executive officer C.W. Lee told StarBiz that the group’s test sockets and stiffeners, for example, would be highly in demand in the consumer electronic manufacturing and semiconductor industries.

Shares of FoundPac have been rallying over the last few weeks. Since hitting its one-year low of 18.8 sen on April 6, the stock has been on an uptrend. Yesterday, it closed 2.5 sen higher at 35.5 sen on a volume of 30.28 million shares.

For the financial year ended June 30, 2018, the group expects to ship out high-precision engineering components with a market value of about RM36mil, which is flat compared to a year ago.

The test sockets and stiffeners are used to assist in the testing of chips that are found in home appliances and semiconductor test equipment.

“Despite the global economic slowdown, the home appliance market has been able to sustain optimistic growth over the past four years.

“The gross margin of test sockets and stiffeners is about 48%, which is why we are confident of improving our performance over the next couple of years,” Lee said.

According to a recent Market Research Store report, the home appliance market grew to US$505bil in 2017 from US$410bil, expanding at an annual rate of 6.71%.

The report is forecasting that the market size will reach US$703bil by 2022.

“We are also seeing worldwide semiconductor revenue hitting US$451bil in 2018, an increase of 7.5% from US$419bil in 2017.

“SEMI is projecting the revenue of the global semiconductor equipment market to hit US$60.1bil in 2018, a 7.5% growth from US$55.9bil in 2017,” Lee said.

According to Lee, the group’s sales in Malaysia were also rising quickly.

“In 2017, the sales of our products in Malaysia were only about 9% of group’s revenue.

“As of March 31, 2018, the domestic contribution to the revenue was about 28%,” he added.

According to Lee, the group is currently upgrading its production machinery as more orders are expected to come in.

Currently, most of the group’s orders come from the United States, which takes up about 40%.

“The orders from Europe are about 23%, which we hope to increase to 30% in 2019,” Lee added.

According to Lee, the group is now negotiating with several major customers to design new high-precision engineering products that could be used to aid test processes of integrated circuits.

“We expect to conclude some of these deals soon. If successful, we can see contribution into our revenue next year,” he added.

FoundPac now has 93 active customers, of which about 40% are in the United States.

For the nine-month period to end-March, the group posted a net profit of RM5.87mil on the back of a RM26.3mil turnover, compared to the RM7.41mil and RM25.5mil achieved in the previous corresponding period.


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