As the global economy faces a potential recession, very few industries are expected to experience true growth. Electric Vehicles (EVs) are one of these few industries. Despite this, it is interesting that the market is currently neglecting an EV company that has enormous potential based on its current valuation and financial performance. This is similar to the story of Genetec Technology Bhd, a company that was once overlooked but is now successful.

Let’s take a look at this Hidden Gem: Artroniq Berhad. Recently, the company secured a Memorandum of Agreement with Beno, Inc for Reevo Bikes Assembly & Finishing services. The agreement involves the assembly of Reevo Bikes on behalf of Reevo with a budget of RM100.0 million over a span of two years. Beno, Inc is a US-based technology company that designs and manufactures electronic mobility products, including electric bicycles. Reevo or the “Reevo Brand” is specifically designed for urban bikers.

Comparison of both companies over a 5-year chart.

A little bit of backstory of this Hidden Gem — the company had secured a Memorandum of Agreement (MOA) with Beno, Inc for Reevo Bikes Assembly & Finishing services back in 12th January 2023. The salient terms of the MOA are as below: -

· The company shall provide assembly services to complete the production of Reevo Bikes on behalf of Reevo with a budget of RM100.0 million over a span of 2 years.

· Beno, Inc is a US-based technology company focusing on the design and manufacture of electronic mobility and their products includes technology modules and complete vehicles, such as electric bicycles.

· Reevo or the “Reevo Brand” is specifically designed for the urban bikers.

On 16th January 2023, the company announced that it had received a confirmation of funds worth RM10.0 million to be released within 30 days. This was in relation to an order to deliver 7,000 bikes, which are expected to be completed on or before 30th June 2023. To fund this new venture, the company proposed to raise funds via private placement, which would raise approximately RM46.8 million (including RM10.0 million from Beno, Inc).

On 19th April 2023, Bursa had approved up to 65.6 million new shares to be issued pursuant to the Private Placement and 196.9 million new shares to be issued pursuant to the exercise of Warrants.

For information, the new venture is expected to contribute RM50.0 million every financial year, where the company had RM143.2 million in revenue for the past financial year. This effectively means that the company is likely contribute 34.9% growth in revenue for the company.

For assembly and manufacturing business of electronic items, this is more likely an electronic manufacturing services (EMS) business. Generally speaking, EMS companies enjoyed a profit after tax margin of 3% ~ 5%, and if we take a midpoint of the said margin prudently, this is expected to contribute at least RM2.0 million to the profit after tax to the company.

Despite a revenue base of RM143.2 million, the company only had RM0.9 million in profit after tax in financial year 2022, hence a guaranteed 200% growth on top of what the company had is warranted.

By now, I’m sure you had already did your research on Google to find out on the name of the company as the information provided are ample to have a confirmation.

But for the sake of those who don’t get the hint (or straightforward answer), this really hidden gem is Artroniq Berhad – and the company is only trading at RM256.0 million’ market capitalization.

This is an opportunity for investors to seize the weaker market outlook as the company is truly being neglected by investors.

We will see you again when Artroniq reaches RM1 in the near future.