The 40% to 50% growth is just a conservative estimate. We are expecting an even better performance. MMS has so far delivered 40 units of semiconductor test equipment to the MNCs in Malaysia and Germany," group managing director T. K. Sia told StarBiz. (File pic shows Sia testing some of the equipment at the factory)
GEORGE TOWN: Semiconductor test equipment manufacturer MMS Ventures Bhd plans to expand its operations in 2022 in line with the positive outlook for the smartphone industry.
The group currently has utilised 80% of its production floor in Bayan Lepas.
“We want to raise our production capacity and capital expenditure by 50% and 30%, respectively.
“The aim of the expansion exercise is to achieve a 20% growth in sales,” group managing director T. K. Sia told StarBiz.
The group is also allocating RM15mil to either purchase or lease a facility to expand in 2022.
Currently, MMS is utilising 80% of its 12,000-square-feet production floor to manufacture 80 to 90 automated test equipment with an estimate RM45mil value annually.
Investing is to find undervalued companies before others do. Looking at PE ratio is one of the conventional ways. How would one discover undervalued gems just by comparing the absolute revenue or net profit amount! It's like comparing Apple Inc and our Maybank: an elephant vs an ant, LOL!
LD? Come.. hehe..I will wait to buy 100k shares at 0.75..effectively then I would be holding the shares at a price of much more discount than the director’s buying price at 1-1.2 range..but, I doubt it would happen..haha..cheers..
According to Sia,the smartphone sector would continue to perform well untill the second quarter of 2022. " Orders in hand secured for the first quarter 2022 has touched RM15 million. " Customers' forecast suggest that the trend should continue into the second quarter 2022,"he said
MMSV will close the 2021 financial year ending December with a 40% to 50% growth in sales over 2020,boosted by strong demand from multinational corporations in the country and direct export to Germany The Group's revenue for the nine months of the 2021 financial year is about RM30 million compared to RM22.6 million for the whole year of 2020
"The 40% to 50% growth is just a conservative estimate.We are expecting an even better performance.MMSV has so far delivered 40 units of semiconductor test equipment to the MNCs in Malaysia and Germany
"These are MNCs involved making chips for the United states-based manufactures of smartphones,automobiles and computers," he said
On the global shortage of chips,Sia said the Group's inventory was well-stocked to cover production for the next six months. "The shortage will not impact us,"he added
The smartphone industry leads currently with a 50% contribution to MMSV's revenue,while the automotive,lighting and original equipment manufacturing segments account for the remaining 50%
MMSV Ventures Switches Strategy to boost machine sales volume. Many companies-such as tech giant Apple and Tesla motors-have successfully used the blue ocean strategy to create new markets for their products. While it helps companies stand out and improve profitability, it isn't without challenges.
Founded in 1997,Penang based MMSV is a semiconductor test equipment maker specialising in optoelectronic-in layman's terms,the light-emitting diode (LEDs)-ad well as sensor, competing in a market with many players.
To differentiate itself in the market, MMSV manufacturers that focused on customised products-well until now. According to MMSV Ventures Bhd Co-founder and CEO Sia Teik Keat says the Group has decided to shift its strategy from blue ocean to red ocean. That is joining other automated test equipment (ATE) peers that cater for the mass market with their standard test equipment in a move to gain market share.
Sia- Instead of just relying on the blue ocean, we need to have some exposure in the red ocean as well.
"We want more customers to buy the same products from us.We want to expand our sales volume and grow our revenue " he says
Going forward, the group will focus on selling more standard machines. Currently, standard machines contribute about 3%to 5% to MMSV's revenue, but their contribution is anticipated to increase to 20% in the next 12 to 18 months.
"We are working hard to turn some of our customised machines into standard platforms.We are engaging local agents in China and Taiwan to sell our standard machines. Hopefully, we will see some favourable outcomes in the coming years, " Sia says
Sia, 67,was appointed to the board of MMSV in 2005.He has more than 20 years of experience in the design and manufacture of automated manufacturing systems, with stints in the Penang units of US-based semiconductor manufacturers National Semiconductor Corp and Monolithic Memories Inc,as well as Dusan Equipment Corp in the US.
Notably, MMSV builds machines for LED and sensor makers such as Lumilds Holding BV,and Osram and Cree.The group currently serves about 20 customers of which seven are considered active customers.
Sia concedes that, in general, customised equipment commands better profit margins-about 5% to 10% higher than standard machines. In other words, MMSV had been concentrating on high-mix low-volume(HMLV)manufacturing.
"We design our equipment based on our customers' needs. Of course from the prospective of costs,most customers would prefer to buy standard machines because they are relatively cheaper, " he says
However ATE manufacturers of customised machines has higher fixed overheads."For examples for every design,we can sell only 5 units. In contrast my competitors who make standard machines can sell 50 units, " Sia says , who owns a 12.14% direct stake and 10.87% indirect stake through Kesiago System Sdn Bhd in MMSV.
The key features of MMSV's machines are vision inspection and testing. It is learn that when it comes to the testers' market,the group has two direct peers in Penang namely Pentamaster and Elsoft.
" Our business model is quite similar to Pentamaster, although they are serving a broader customer based.But when it comes to the LED and sensor markets, I would say Elsoft is our closets comparison, because both of us focus on serving similar customers," Sia says.
Today, LEDs and sensor account for 80% of MMSV's revenue, while the remaining 20% comes from other semiconductor devices and original equipment manufacturing (OEM)
It is worth nothing that under MMSV's LED and sensor business division the Group breaks it down further to three main-segments namely,smart devices,including smartphones, smart watches and tablets,contribute about 50% to 60% of the group's revenue.
"Frankly,the general lighting market is very competitive but we expect the automotive segment's contribution to increase from 10%to 15% currently to 20% by next year " Sia says
"Obviously many ATE companies are riding on the electric vehicle (EV) wave.I believe MMSV will benefit from this trend as well as because EVs will definitely need more LED and sensors from the likes of Lumileds and ams Osram, " he pointed out
The worst seems to be over for MMSV,as the group reported a net profit of RM6.71 million in the accumulative nine months ended 30 September,2021 (9MFY2021) on revenue of RM30 million.The stronger financial results were attributed to higher sales of machines,improved gross margin and a decrease in administrative expenses.
"We expect our financial performance in 2HFY2021 to be 50% higher than first half. NEXT YEAR WE EXPECT TO SEE A VERY STRONG EARNINGS PERFORMANCE IN 1QFY2022,and hopefully we can achieve revenue growth and profit growth at least 20@ for the full year," Sia says
He adds that some locally listed ATE firms have been seen their stock prices soaring in recent years,partly due to their low free floats as their major shareholders control as much as a 70% stake in these companies.
"But if you look at MMSV,the major shareholders only own a [roughly] 50% stake in the company; the rest is out there for investors to invest and trade.Our share are more liquid," Sia says
EPS at 0.0134 for Q1, assuming annualized EPS around 0.054, the company is trading at a forward PE of 12.5 at 0.675. Could be the counter trading at the lowest PE multiple among the tech. What is the average PE multiple in the tech now? Cheers.
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