Just a refresher of the chairman said in May 2015 to keep ourselves grounded ...
Chairman's Statement, 2014 Annual Report
Financial Performance
The Group has been making investment into research and development of its own products namely SPG102 and also SD WiFi card and USB Wi-Fi drive and as a result, it has posted a net loss after taxation (“LAT”) of RM34.25 millions for the financial year ended (“FYE”) 31 December 2014, an increase of 353.78% compared to the previous financial year. The loss is largely attributed to lower revenue than expected and high fixed cost associated with the fabless IC design company where R&D engineering and EDA tools are the bulk of the cost. Despite of our success in the commercialization of Wi-Fi Secure Digital (“SD”) system-on-chip (“SoC”), SPG101, which goes into the SD Wi-Fi card that goes into the digital camera, the volume is lower than expected as the market for Digital Still Camera has declined substantially. There was also some delay last year in our new customers in launching this product. However, these products are all successfully developed and have gone into initial mass production. Additionally, we have co-developed with one of the customers the SD Transfer Jet card to be used with the Digital Still Camera, giving much higher data transfer speed. Nevertheless, as of the time that this statement is written, these new ODM customers have gone into initial mass production of their products. We expect the volume of these products to increase, making significant contribution to our future revenue.
Industry Trends and Development
The overall growth of semiconductor industry remains moderate as compared to previous years. However, Internet of Things (IOT) market is fast growing but the market trend is yet to stabilize. Recently, there are some wearable or smart devices that are coming into the market, namely the smart watches, smart glasses (or sunglasses) and smart pen. The market potential of these products is huge but it is yet to see how large this market could grow into at this time. Most of these devices are not equipped with Wi-Fi yet, and they are potential candidates that could adopt our SPG solutions. Currently most of these smart devices are pretty much standalone, i.e. not connecting to the Cloud and services, except with an APP running on the smart phones, and as soon as the application developers move into this market, these devices will be connected to the Cloud for various applications and services.
With the products taking shape and space in the market, there will be additional enhancement or features that will be added to these platforms, making these platforms targeting in more specific applications. We see these products are opportunities for our SPG product lines.
We also foresee these products will continue to grow in features and functionality extending to Cloud. Some of the intelligence and analysis will be growing in the Cloud, creating another set of business opportunities for players in the Cloud space. The combination or integration of wearable devices and the APP and Cloud will form a total solution for service providers or integrators to provide their services. IP camera with APP and Cloud will be integrated to traditional security companies that would like to offer services to monitor homes. Effectively, the market is moving and growing in the IOT space.
Prospects
The Board is of the opinion that the Group is at the turning point of improving performance in the coming years. Over the past 4 years, the Group has transformed from the ASIC design services to developing its down complete products, i.e. its own SoC, system board, Cloud and APP. There is a tremendous amount of effort in the past 6 months in completing our own SD Wi-Fi card and USB Wi-Fi drive and getting them into mass production in Q2-2015. We have also expanded the capability to develop the Cloud and APP as the center piece for the SD Wi-Fi card and USB Wi-Fi drive. We have completed development of an IOT solution or eco-system ranging from APP to chip (A2C).
In the design service business that Group currently has where we develop IP blocks and provide design services for ASIC/SoC, we are now capable of providing the complete solution design service ranging from APP, Cloud services, hardware system and chips. This is one of the very few companies in the world today that is capable of providing this total solution ranging from APP to chip design service. We plan to begin marketing this service at the second half of 2015.
While the Group continues to provide IP development, ASIC design service and sales of SPG chips, the Group will begin the shipment of Kcard at the end of Q2 2015 and Kdrive in Q3 2015. This will add another revenue stream to the Group with the product line of higher unit price.
The next generation of the SPG product line, SPG102 that has the USB2.0 and SD3.0, giving the chip the capability to expand into the USB market as well and the ability to support up to 2TB of Flash. This chip will be released to ODM customers in late Q3 and Q4 for design in, and we expect the product to contribute revenue in 2016.
Research & Development (R&D)
Innovation, Research & Development remains the core competency of the Group. The Group will continue to invest in the R&D to get the Group to the next level of capability, making the transformation to be one of the leading companies globally with APP to chip (or A2C) design capability.
In the space of IP development for ASIC, the team has made great breakthrough. We have received certification of our USB2.0 PHY and we also USB3.0 PHY to be certified soon, making Key ASIC one of the very few companies in the world that has the capability to develop PHY. We have also developed SD3.0 IP that is used in the SPG102 tape out and it is proven functional in real silicon. We will continue to develop IP blocks that are needed in the development of Internet of Things (IOT) products.
The volume forecasted for some of ASIC customers is running as expected. There will be two ASICs tape out on 65nm this year, and we expect some volume from these chips sometime next year. These chips are long life span chips, and we expect these chips to generate on going revenue for the next few years.
The Group has completed the design of Kcard and Kdrive and will be shipping the end user products to the market soon. The team will be looking at development of a few other IOT “smart” products in the next 12-18 months using SPG102 chips. We will also be looking at launching this SPG102 platform soon, making it available for other ODM customers to develop any other “smart” products.
Finally and most interestingly in the area of R&D, the Group has built the capability to develop Cloud and APP, completing the IOT eco-system. With this capability, we now can design and develop a complete IOT system from APP to chip (“A2C”). This will allow us to extend our business model to include services beyond the Cloud.
Appreciation
I wish to express my sincere appreciation to all the members of the Board of Directors who have continuously providing us with invaluable guidance, Shareholders who have been patiently providing us with their support, dedicated employees who have been rendering their innovative effort into delivering the products, our indispensable business partners and associates, for their effort, contribution and their continuous support to the Company.
Our Khazanah Nasional Berhad holds 27.53% of Key Asic Berhad. The CEO, Mr Eg Kah Yee, is a fellow Malaysian with credentials and extensive experience in this field. Mr Eg is also the current chairman of Malaysia Integrated Circuit Design Association.
Thank you candidly, but my view is that the timing is a priority!!!!! For this stock, the price is not a problem. Maybe I still need some time to wait for the opportunity to re-admission...........
Posted by kmohan62 > Oct 28, 2015 07:53 PM | Report Abuse
I expect the price of this share to be around the region of RM 0.85 to RM 0.95 next year this time around...that is in fact a conservative projection ( how I reach at that price estimate?..don't ask me..) ..just check my prediction of Evergreen about four five months ago in this forum..
TengkuFaisal 1133 posts
Posted by TengkuFaisal > Oct 28, 2015 08:08 PM | Report Abuse
Why not say 3.60 like inari? Sorchai dreaming
kmohan62 192 posts
Posted by kmohan62 > Oct 28, 2015 08:24 PM | Report Abuse
Tengku Faisal,Well,then just ignore my comments..did I point a gun at your head and force you to invest in this stock...? A classic negative
I won't say this stock no good. As i said many times... only buy after it announce a turnaround result. Don't speculate.... look at ifca and evrgreen It still has so much room after announce the result
This is zamsaham recommended counter..i hv no comment as majority his pick are too speculate and short term..you must open your eyes big to monitor every second on the pricing...very tired to trade such counter
Nevertheless, if you all already got the internal info that this counter will be recovered and profitable in next and coming future then you all shall accumulating it quietly at a lowest price.......
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Koon Bee
325 posts
Posted by Koon Bee > 2015-12-09 21:31 |
Post removed.Why?