KUALA LUMPUR: VS Industry Bhd (VS Industry) has secured new orders in the Philippines with an aggregate value of RM1.5 billion over the next two financial years.

The electronics manufacturing services provider said its wholly-owned subsidiary, VS Industry Philippines Inc has secured new orders from a key customer to manufacture selected consumer electronics products on box-build assembly basis, that is, provision of end-to-end processes from production to assembly, testing, packaging, labelling and logistics arrangement.

It said the expected revenue contribution from the customer based on the recurring nature of the orders is RM300 million for the financial year ending July 31, 2025 (FY2025) and RM1.2 billion for FY2026. 

"This is derived from anticipated sales volume and pricing, bringing the aggregate expected revenue over the next two financial years to be RM1.5 billion," it said in a statement.

Managing director Datuk SY Gan said the company wants to hit the ground running at the facility in the Philippines and targets to commence mass production by the first quarter of 2025.

To fulfil the new orders, VS Industry Philippines has also entered into a lease agreement with ALogis Artico, Inc for the lease of 52,782 square metres within a factory building located in Batangas.

He said the company has strategically chosen an asset-light model for its venture in the Philippines as a core element of our risk management strategy.

"Hence, the group's facility in the Philippines is rented, which significantly lowers our financial commitment. The group has allocated around RM100.0 million for capital expenditure, which would be funded through internally generated funds. 

"Installation of the machine shall commence soon with trial runs to proceed thereafter," he said.

The lease shall be for a term of five years commencing from Sept 2, 2024, with an option to renew for a further five years upon terms to be mutually agreed upon.