By Sangeetha Amarthalingam / theedgemarkets.com | December 9, 2016 : 4:18 PM MYT
SUNGAI PETANI (Dec 9): EG Industries Bhd is eyeing a 30% contribution to revenue from its box-build segment with an estimated RM250 million order book delivery for the financial year ending June 30, 2017 (FY17), as its customer base continues to grow, with increasing orders.
Revenue from the box-build segment doubled from RM63.6 million in FY15 to RM128.3 million in FY16, which made up 10% and 18% of annual revenue in their respective years, it said in a statement today.
"In the past two years, we have been increasingly entrusted with the full scope of manufacturing customers' products shown by the steady sales uptrend in this segment," said group chief executive officer and executive director Alex Kang.
Box-build refers to end-to-end manufacturing services, from designing to shipping of completed products to customers' end users.
The group's undertaking of this production was part of its strategic shift to move up the value chain from printed circuit board assembly, thus achieving a higher-margin product mix.
The group supplies international brands including United Kingdom's largest consumer electronics product company, and the medical and automotive sectors.
Speaking at the group's annual general meeting, Kang said EG Industries was gaining confidence from existing customers and growth-centric new clients.
"With an estimated order book of RM250 million to be delivered in FY17, we believe the revenue contribution target of 30% from box-build can be achieved.
"Our new production facility here [in Sungai Petani] increased our overall capacity by 20%, positioning us favourably for future prospects. It is operating at 35% utilisation, providing us with enough room to expand our scope of services, particularly end-to-end box-build services," he added.
The group will continue exploring opportunities to move up the electronic manufacturing service (EMS) value-chain by leveraging on its strategic location in the distribution hub in Malaysia to allow access for international customers into the Southeast Asian market.
Moving forward, Kang said, it wants to take its partnership with customers a step further by distributing their products in the region.
This, he said, would add value to customers as they can make inroads into the region with a market that is large and increasingly affluent.
"This way, we would strengthen our position as a one-step vertically integrated EMS provider to our foreign clients," he added.
At 3.38pm, EG Industries' shares dipped half a sen or 0.6% to 82.5 sen, for a market capitalisation of RM174.3 million.