Feytech Holdings Bhd executive director Go Yoong Chang speaks after the company's listing ceremony on Bursa Malaysia while CEO Connie Co (right) looks on. (Photo by Shahrin Yahya/The Edge)

KUALA LUMPUR (May 21): The proposed fuel subsidy rationalisation by the government could impact the local automotive market, which houses its major customers, primarily consisting of automotive vehicle original equipment manufacturers (OEMs), according to automotive seat manufacturer Feytech Holdings Bhd (KL:FEYTECH).

Nevertheless, the impact could be offset by the salary hike announced by the government for civil servants, said executive director Go Yoong Chang.

“[The fuel subsidy rationalisation] will have some effect on the automotive market, but we also see some positive news from the government that they will increase the civil servants’ salary by year-end,” he told reporters after the listing ceremony on Bursa Malaysia.

“I believe there will be more disposable income from the civil servants to buy cars,” he said.

Meanwhile, the group believes that it will be unaffected by the government's latest announcement to extend the freeze on foreign worker applications, as it is not seeking to hire more foreign workers and plans to focus on hiring local workers instead for its plants in Kulim, Kedah.

“Government policy is not within our control. What we can do is to control our costs and provide good service, engage new customers and explore new markets,” said Feytech chief executive officer Connie Go, adding that the group remains “very optimistic” about the automotive market in Malaysia.

According to the Malaysian Automotive Association (MAA), new vehicle sales in Malaysia rose 21% to 57,991 units in April 2024, from 47,802 units in April last year. Year to date, the MAA noted that the sales volume for April 2024 reached 260,236 vehicles, an 8% increase from 240,417 vehicles during the same period last year.

Feytech currently operates a plant in Tampoi, which manufactures seat covers and a plant in Kulim, which manufactures automotive seats. It plans to expand Kulim Plant 2 with RM18.76 million from its proceeds. According to the group, the utilisation rate of Kulim Plant 1 for the first quarter ended March 31, 2024 (1QFY2024) was 39%. In FY2023, the utilisation rate was 23.5%.

For the first quarter ended March 31, 2024 (1QFY2024), Feytech posted a net profit of RM16.88 million on the back of revenue of RM70.65 million. There are no comparative figures for the preceding corresponding quarter as this is the first interim financial statement announced by the company.

On Tuesday, Feytech made a strong debut on Bursa Malaysia’s Main Market with a 30 sen or 37.5% premium to its initial public offering (IPO) price of 80 sen.

It climbed as much as 37 sen to RM1.17 during early trade, before paring some gains to trade at RM1.05 at the time of writing, after 88.91 million shares changed hands. At its current price, the group is valued at RM885.36 million.