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More manufacturing hubs seen post-pandemic

Malaysia and other Asia Pacific (APAC) countries will see more manufacturing and investment hubs post-pandemic which could change the regional trade dynamic.

United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP) director of trade, investment and innovation Rupa Chanda said it is difficult for many sectors to have the skills and capacity of the existing hubs but she does anticipate decentralisation of production.

“We already see many multinational corporations shifting their production area around.

“If countries need to leverage on this dynamic, they need to focus on their diversification strategy so they can participate and benefit from this,” she said in a webinar on Launch of the Asia-Pacific Trade Facilitation Report 2021: Supply Chain Resilience and Trade Facilitation amid the Covid-19 Pandemic yesterday.

The Covid-19 pandemic highlighted the importance of prompt international support and cooperation for continuous supplies of critical medical goods, more so given the need for doing so sustainably and inclusively.

The high cost of trade in APAC continues to rise, but ongoing efforts to facilitate commerce will help keep goods flowing throughout the region, according to a new report by the ESCAP and the Asian Development Bank (ADB).

Economies in the region have shown continued progress in streamlining trade procedures despite the Covid-19 pandemic and the subsequent supply chain disruptions and surge in shipping costs — which hit an all-time peak this year.

Implementation of 31 general and digital trade facilitation measures rose on average across the region to 64.9% in 2021, about six percentage points higher than in 2019.

UN Under-Secretary General and ESCAP Executive Secretary Armida Salsiah Alisjahbana said if countries speed up their implementation of digital trade schemes, average trade costs could drop by more than 13%.

“Besides digitalisation, there is also a need to pursue trade facilitation policies that make trade more sustainable and inclusive, leaving no one behind.

“Measures are specifically needed to support small and medium enterprises, women and the agricultural sector to make recovery more sustainable,” she said.

ADB VP for knowledge management and sustainable development Bambang Susantono said border closures, export controls, and health and safety protocols have disrupted production and the flow of goods across international boundaries, with dire effects on the supplies of critical goods such as food, personal protective equipment and vaccines, especially for the poor and vulnerable.

“The report further explained the role of the World Trade Organisation regarding the Trade Facilitation Agreement and the related UN treaty on cross-border paperless trade in Asia and the Pacific to accelerate recovery post-pandemic while trade openness remains a key element.

“As the pandemic has quickened the move to trade digitalisation, more work is needed to leverage digital technologies to streamline customs procedures and electronic exchange of information, and implement national and regional single windows for document submission and clearance,” he explained.

About two-thirds of 20 Asia-Pacific Economic Cooperation economies implemented new trade facilitation measures to mitigate supply chain disruptions.

Many countries in the region also accelerated measures related to transparency and institutional coordination, simplification of customs procedures and expedited clearance as the pandemic had shown the significance of prompt global and regional support and cooperation to ensure continuous supplies of critical goods.

According to the report, trade openness remains a key element for economic recovery.

“Countries should refrain from using export restrictions and other non-tariff measures. They should also increase transparency on trade restrictions implemented during and in the aftermath of Covid-19,” the report noted.

Source: The Malaysian Reserve

More manufacturing hubs seen post-pandemic

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These new factories will consolidate operations of Hotstar which manufactures die-cutting moulds and tools

Ace Market-listed CEKD Bhd will invest RM8.8 million from its RM24.28 million raised from its IPO to build two new factories in the Kepong area to streamline its production capacity.

Its MD Yap Kai Ning said these new factories will consolidate operations of its wholly owned subsidiary, Hotstar (M) Sdn Bhd, which manufactures die-cutting moulds and tools.

“Hotstar’s operations are currently conducted at three different locations. So, with the consolidation, we can increase our efficiency and increase management ability as well,” Yap said during the virtual listing ceremony yesterday.

The die-cutting solutions provider debuted at 25% or 12 sen premium over its issue price of 48 sen. The stock closed its maiden trading day at 54.5 sen in active trade.

Yap said RM3 million would be used to purchase new machinery, while RM1.3 million will be for the development of computer software and systems.

“We will be investing in technology, software and new machinery to increase our capability due to higher demand for the accuracy of die-cutting moulds, the fast turnover of the packaging industry and the sophisticated packaging needed.

“We also will invest in software and systems to increase automation of certain operation processes in line with Industry 4.0 to have higher automation in our business, and it will be one of the key investments to cater for our future growth,” stated Yap.

CEKD also plans to widen its customer base in South-East Asia. “We want to tap into global markets especially in South-East Asia. We intend to go to countries with a higher population in South-East Asia as it has more consumers and needs more types of packaging to cater for the demand of the consumer,” she added.

Yap said the rise of e-commerce would lead to higher demand for packaging such as paper boxes, corrugated boxes and eco-friendly packaging.

“E-commerce will need our die-cut moulds for their packaging which will also provide us opportunities for innovation in the packaging industry to enhance packaging design and product safety, improve the unboxing experience and optimise packaging for last-mile delivery,” said Yap.

Yap said CEKD is confident the die-cut moulds will be in demand for the next few years in tandem with the trend of sustainable packaging.   Source: The Malaysian Reserve

CEKD to invest RM8.8m to build 2 new factories in Kepong

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Serba Dinamik Holdings Bhd is hopeful that the elevation of the aerospace industry as one of the strategic industries under the 12th Malaysia Plan (12MP) will benefit its aerospace division parked under wholly-owned Serba Dinamik Group Bhd (SDGB).

SDGB was not a new player in the aerospace segment, according to Serba Dinamik, adding that it had a strong objective and vision on how to lift the industry to greater heights.

“Serba Dinamik is always forward looking and will support Malaysia’s inspiration to develop aerospace business which could propel economic growth and generate high skilled worker,” its group managing director and chief executive officer Datuk Mohd Abdul Karim Abdullah said.

“More broadly, Serba Dinamik could leverage its expertise to facilitate the government’s efforts to realise the Fourth Industrial Revolution by attracting more foreign investments to the Malaysian shores.”

A 12MP document released by the Economic Planning Unit on Monday shows that the aerospace industry was among strategic industries to propel Malaysia into the high technology trajectory, generating RM30 billion revenue by 2025 from RM11.6 billion in 2020.

Under the 12MP, the government envisaged that the industry would create 30,000 jobs over the next five years and undergo transformation to produce more complex products and services.

SDBG, currently in compliance with the AS9100 certification (a widely adopted and standardised quality management system for the aerospace industry), aspires to become a prominent aerospace industry player in Malaysia by specialising in areas such as machining, assembly and special process for aerostructure and aero engine.

This is by way of further acquiring extensive international certification such as NADCAP (National Aerospace and Defense Contractors Accreditation Programme), Customer Approval, DPD/MBD (Digital Product Definition/ Model Based Definition) and AMO (Accredited Management Organisation).

“Our focus is MRO (maintenance, repair and operations) and manufacturing of metallic component by machining as well as solid engineering capabilities to develop manufacturing processes and tooling required, and concurrent engineering to support our clients in programmes at manufacturing phases,” Abdul Karim said.

Source: NST

12MP: Serba Dinamik ready for aerospace industry challenge

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ExecuJet MRO Services, an aircraft maintenance, repair and overhaul (MRO) firm wholly owned by French aerospace firm Dassault Aviation SA, plans to build a new, purpose-built MRO facility in Malaysia.

ExecuJet MRO Services now has a MRO services facility based at Subang airport in Selangor.

In a statement on Tuesday, ExecuJet MRO Services president and founder Graeme Duckworth said the company is also developing another MRO facility in Dubai that is due to open in the first half of 2022.

“ExecuJet is expanding further, with Malaysia and Dubai being the key growth areas. This is fundamental to (parent) Dassault’s strategy to ensure there is always the right level of capacity and capability for customers wherever they need it, and it supports the ExecuJet growth plans well,” said Duckworth.

“Despite tough competition, we have a very loyal customer base, which is constantly expanding,” he added.

In September 2019, ExecuJet MRO Services vice-president for Asia Ivan Lim was reported as saying that the company planned to reinforce its local presence by having a new integrated MRO facility at Subang airport to cater to the region, expected to be completed in 2021 or by 2022. Lim reportedly said ExecuJet MRO Services Malaysia would move its operations to a new facility with capacity of between 100,000 sq ft and 150,000 sq ft from the 64,000 sq ft facility that it leased at Subang Airport.

Celebrating its 30th anniversary this year, ExecuJet MRO Services currently has MRO facilities in Africa, Asia, Australasia, Europe and the Middle East.

Specialising in airframe, avionics and engine maintenance, ExecuJet MRO Services engineers are factory-trained and certified for a wide range of aircraft including Dassault, Bombardier, Embraer, Gulfstream and Hawker. 

Source: The Edge Markets

ExecuJet plans new MRO facilities in Malaysia, Dubai

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The halal industry is expected to contribute 8.1 per cent to the country’s gross domestic product (GDP) and generate RM56 billion export revenue in 2025 compared to RM30.6 billion in 2020, according to the 12th Malaysia Plan (12MP) document released by the Economic Planning Unit (EPU) today.

The halal industry, therefore, would be strengthened to produce competitive domestic halal industry players in capturing a bigger global halal market share.

“Measures will be undertaken to enhance the capacity and capability of the halal industry by uplifting the development of halal talent, establishing halal professional recognition, accelerating industry development including Bumiputera participation, increasing product competitiveness, and positioning Malaysia as a global halal hub,” said the document.

It also said that in positioning Malaysia as a global halal hub, the halal supply chain would be improved and Malaysia would be promoted as a prime destination for halal investment through various international platforms, such as ASEAN, the Organisation of Islamic Cooperation (OIC), and chambers of commerce.

The regional network and distribution channels of local large companies and multinational corporations (MNCs) would be leveraged in promoting export-oriented products and services.

The document stated that the existing distribution centres such as the Digital Free Trade Zone (DFTZ), Port Klang Free Zone (PKFZ) and halal e-commerce platforms would also be leveraged to promote seamless connectivity of the halal supply chain.

“By strengthening the role of halal parks to be more industry-friendly, it will attract new investments and expand existing businesses, while a holistic development approach will be used to revive existing underperforming halal parks,” it said.

In addition, incentives would be improved to attract strategic partners to invest in halal-promoted products and services, whereby a syndicated Islamic fund and a digital advisory platform would be established to provide financial solutions for local and international companies.

On uplifting the development of halal talent, the document said the halal occupational framework would be expanded to include talent requirements in high potential industries such as pharmaceutical, cosmetics and medical devices industry, through engagement with the industry.

“The academic programmes and training modules will be streamlined and accredited In accordance with the National Occupational Skills Standards (NOSS) and Malaysian Qualifications Framework (MQF).

“Higher educations and skills training institutions will be encouraged to offer more halal-related programmes to produce graduates with holistic halal knowledge and skills,” said the document.

Additionally, a collaboration between public research institutions and the private sectors will be strengthened to create a pool of halal researchers and engineers, thus increasing the ability to produce high-value halal products and services.

To broaden the accreditation of halal professionals for the global market, the document stated that the Halal Professional Board (HPB), which comes under the Department of Islamic Development Malaysia (JAKIM), would be restructured based on new regulations while the mechanisms related to halal professional practices, standards, codes of conduct and competency assessment would be identified.

Meanwhile, through the implementation of the Halal Industry Master Plan 2030 (HIMP 2030), the industry would be further developed by leveraging domestic strength, including by increasing the participation of Bumiputera companies to enhance industry competitiveness.

“Halal services, in terms of consultancy on the halal ecosystem, will also be offered to interested countries including non-Muslim majority countries to build Malaysia’s halal brand recognition.

“The halal-related Malaysian Standard (MS) will be enhanced as a key enabler to improve the competitiveness of products and services,” it said.

In the 11th Malaysia Plan, the industry grew by an average of 5.5 per cent per annum while the value of halal exports increased marginally by 0.8 per cent per annum from RM39.4 billion to RM40.6 billion during 2016 to 2019.

However, GDP contribution from initiatives that focused on the development of halal standards and certification, branding and promotion as well as commercialisation of halal products and services decreased in 2020 to RM92.7 billion, while export declined sharply to RM30.6 billion.

Source: Bernama

12MP: Halal industry to contribute 8.1 pct to GDP, RM56 bln export revenue in 2025

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The electricals and electronics (E&E) industry is targeted to contribute RM120 billion to gross domestic products (GDP) and generate RM495 billion in export earnings by 2025.

Under the 12th  Malaysia Plan (12MP), the E&E industry players will be encouraged to adopt advanced technologies and produce more sophisticated products, resulting in higher productivity and growth.

According to the 12MP Document released by the Economic Planning Unit (EPU) today, the E&E industry needs to be repositioned by boosting investments in highvalue activities such as design and development (D&D) and front-end manufacturing.

“In this regards, efforts will be focused on strengthening manufacturing ecosystems, promoting new technology adoption, uplifting the development of talent, as well as enhancing research and development (R&D) and D&D activities,” it said.

To strengthen the E&E industry ecosystem for higher value chain, the EPU said a comprehensive ecosystem based on a more systematic approach is important to ensure the sustainable development of the industry.

In this regard, it said a national E&E roadmap will be formulated to provide strategic direction for the industry, with key subsectors comprising, among others, semiconductors, solar photovoltaic, light-emitting devices, electronics manufacturing devices, and manufacturing-related services.

“The roles of relevant organisations will be enhanced to better coordinate and create strong linkages and collaboration with research institutions, as well as between public and private sectors. Incentives for the E&E industry will be restructured to be more impactful. The implementation of these initiatives will enable the streamlining of government funding, technical support and facilities,” it said.

According to the EPU, efforts will also be undertaken to move the E&E industry towards higher-value activities across the supply chain with greater automation and advanced technology utilisation.

Meanwhile, it said multinational companies (MNCs) will be encouraged to facilitate the enhancement of local micro, small and medium enterprise  (MSME) capabilities, of which, the implementation of the Lighthouse Project, introduced in 2020, will be intensified to encourage MNCs to assist MSMEs in embracing digitalisation and Globalisation 4.0.

In uplifting the development of talent and capability for the industry, the EPU said various micro credential programmes will be expanded based on the Triple Helix model, where additional skills sets, including software coding and data analytics modelling, will be provided by various training institutions to meet market demand.

It said several initiatives will be implemented to develop talent in the industry in line with the National Fourth Industrial Revolution (4IR) Policy, including creating an industry-led 4IR skills development centres, incentivising industry to reskill and upskill employees in 4IR, and establishing an  artificial intelligence-enabled data platform to facilitate manpower planning.

“To accelerate the development of the high-end manufacturing industry, employees will be upskilled and reskilled in the field of designing. A dedicated centre will be identified to train highly-skilled design engineers to meet industry demand,” it said.

In 2020, the EPU said the E&E industry contributed 64 per cent to the GDP valued at RM86.1 billion, while from 2016 to 2020, the industry grew 5.6 per cent per annum, slightly higher than the manufacturing sector growth of 3.3 per cent per annum.

“In addition, the E&E subsector dominated the country’s exports with total exports share accounting for 45.6 per cent or RM386.1 billion in 2020. A total of 577 E&E projects with investments of RM71.4 billion were approved between 2016 and 2020,” it added.

Source: Bernama

E&E industry to contribute RM120 bln to GDP, generate RM495 bln in export revenue by 2025

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The aerospace industry has been identified as one of the strategic industries under the 12th Malaysia Plan (12MP) to propel the country into the high technology trajectory, generating RM30 billion revenue by 2025 from RM11.6 billion in 2020.

According to the 12MP document released by the Economic Planning Unit (EPU) today, the industry, which is projected to create 30,000 jobs over the next five years, would be transformed to produce more complex products and services.

“The initiatives will include developing a sustainable ecosystem, clustering and zoning of aerospace activities, establishing an aerospace digital system and venturing into sustainable energy.

“These initiatives will improve industry capability and competitiveness, thus strengthening its position in the global value chain,” the document said.

To develop a sustainable aerospace ecosystem, it said the National Aerospace Industry Coordinating Office (NAICO) would be upgraded as an agency to enhance its role in facilitating the implementation of initiatives and action plans under the Malaysia Aerospace Industry Blueprint (MAIB) 2030.

It said the upgrading of NAICO would also strengthen its role in coordinating the implementation of the newly introduced Aerospace Industry Framework, which laid out the industry’s overall targets as well as strategies and desired outcomes for each cluster to achieve MAIB 2030 objectives.

“A centre of excellence for aerospace will also be set up to provide training and share best practices and facilities, especially for the micro, small and medium enterprises to enhance industry competitiveness and position Malaysia as the regional aerospace hub in Southeast Asia,” it said.

Under the 12MP, it said the capabilities of aeronautics and astronautics facilities would be improved and current infrastructure would be used optimally while local expertise would be enhanced to strengthen the aerospace industry.

It said efforts would also be undertaken to create a new source of growth through strategic cooperation between the government and local players involved in the aerospace industry.

“Incentives and financial assistance will be enhanced for the industry to remain competitive in the global value chain and promote sustainable growth.

“This is particularly critical as global markets, including Malaysia, respond to and recover from the economic and social implications of the Covid-19 pandemic,” it said.

The document said incentives would also be reviewed to accelerate research and development, innovation and high value-added investments.

Meanwhile, it said loan and loan guarantees for businesses would be explored to enhance the industry access to liquidity in compensating for reduced cash flow due to the impact of the pandemic.

It said the development of the aerospace industry would be realigned to create specialised capabilities through the clustering and zoning of aerospace activities in selected economic areas.

“The industry development will focus on four clusters, namely maintenance repair and overhaul, aerospace manufacturing, systems integration, and engineering and design services to create synergy and promote the growth of local players.

“The zoning and clustering of aerospace activities will be based on the inherent strengths of each economic area,” it said.

It added that the aerospace digital system would also be established as a central data repository for aircraft operations.

Source: Bernama

Aerospace industry to generate RM30 billion revenue by 2025

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Hextar Global Bhd has ramped up its merger and acquisition (M&A) activities to diversify into the specialty chemicals sector. The group is among the largest agrochemical producers in Malaysia.

In July this year, the group acquired the Chempro Group for RM138mil.

The deal for Chempro, which provides niche specialty chemicals products for cleaning, hygiene and food as well as rubber glove industries in South-East Asia, came with a profit guarantee of RM39mil over three years which translates to a profit after tax (PAT) of RM13mil a year until financial year ending Dec 31, 2023 (FY23).

Also in July, Hextar Global proposed to acquire the Nobel Group for RM105mil.

The Nobel Group manufactures and supplies chemical derivatives, coating and related products and its customers include the large rubber glove makers.

The deal for Nobel, expected to be completed by early October, also comes with a profit guarantee of RM42mil over three years, which translates into a PAT of RM14mil per year.

Hextar Global executive director Datuk Eddie Ong Choo Meng (pic) is not concerned by analyst reports of lower average selling prices (ASPs), higher compliance costs and intensified competition that are expected to weigh down on glove makers’ profitability.

A recent Hong Leong Investment Bank (HLIB) Research report opines that all glove makers will scale back on their expansion plans and be more disciplined in the commissioning of new lines, so as to not flood the market with excess supplies or put downward pressure on ASPs.

“We do not see this as an issue. Even though glove makers may be scaling back on their expansion plans, Malaysia is still currently the world’s largest producer, producing over a 100 billion pairs in 2020.

“Hence, the existing production is already very large. We are confident that Chempro Group and Nobel Group will meet their profit guarantees,” Ong tells StarBizWeek via email.

In July, Hextar Global also proposed to enter the oil and gas sector via buying a 49% stake in Enra Kimia for RM24.5mil cash, partnering Ekopintar Sdn Bhd which will buy the balance 51% for RM25.5mil from Enra Group Bhd.

Enra Kimia supplies specialty chemicals, catalysts and odorants, as well as provide ancillary services for these products to the oil and gas and petrochemical industry in Malaysia, Australia and New Zealand.

Ong points out that Enra Kimia is licensed to conduct business with national oil company Petroliam Nasional Bhd (Petronas), and has the skill and experience in handling hazardous chemicals that has taken years to acquire.

“The oil and gas industry is very difficult to penetrate. This opportunity was one which we could not refuse. Datuk Mazlin Md Junid (president and group CEO of Enra Group) has years of experience in the industry and is the driving force behind Enra Kimia’s business. We are very optimistic that our partnership in Enra Kimia will be a rousing success,” he says.

Ekopintar is partly-owned by Datuk Mazlin, who is also a director of Enra Kimia.

Ong also took into account that for the financial year ended March 31, 2021, Enra Kimia had recorded its lowest profits over the past three financial years, as the company was badly affected by the movement control orders due to the Covid-19 pandemic.

“However, as the economy is slowly reopening, we expect that business recovery for Enra Kimia will come swiftly. As it is, we are already seeing average crude oil prices recovering from circa US$40 (RM167) a barrel in 2020 to an average of US$65 (RM272) a barrel in 2021, and is now trending at above US$70 (RM293) a barrel in September 2021,” he says.

Ong says the acquisitions would enable Hextar Global to diversify its chemical product offerings to industries which are core drivers of the Malaysian economy.

He explains the group’s recent diversification allows it to expand its earnings base, and thus reduce its dependence on just one sector or industry.

“This makes us resilient. We still have the appetite to acquire companies and are always on the lookout for opportunities,” he says.

“We foresee that contributions from the specialty chemicals sector will be the catalyst for our future earnings growth, whilst the agriculture segment will continue to be the bedrock of our group,” Ong explains.

Ong recalled that two years ago, when Hextar Global was formed after Hextar Chemicals Ltd group merged its agrochemicals business with Halex Holdings Bhd, he had told investors that its strategy to grow was through M&As.

“The agriculture industry is also a mature industry where you will not find new plantations being developed overnight. Hence, the fastest way to grow further and to expand our earnings base would be through M&As,” he explains, adding that the group still wants to continue to grow its presence in the agriculture industry.

“Hextar Global’s background is in agriculture and we have extensive knowledge of the industry. We will leverage on this knowledge to seek out opportunities to expand in other agriculture related businesses,” he says.

Ong noted that agriculture remains a vital sector in the country’s economy, and is expected to be among the main focus areas in Budget 2022 as the government looks toward reducing the country’s dependency on imported food in the long run.

Hextar Global is the leading crop management solutions provider in Malaysia with a strong global presence, due to its specialised agrochemical products supply chain.

Currently, about 95% of the group’s revenue comes from its agriculture segment, and the balance 5% is contributed by its consumer products segment which produces disposable healthcare items such as wet wipes, tissue and cotton-based products.

In a report, PublicInvest Research noted that Hextar Global’s consumer products segment had slipped deeper into the red with a net loss of RM800,000 in the recent second quarter ended June 30, 2021 (2QFY21).

Ong explains that the segment was badly affected by movement restrictions as many retail outlets and shopping malls were closed.

“These are our main distribution channels. We will, however, continue to work hard at turning around this business as we still believe it is a good business with products that are widely used by a wide range of consumers and where demand remains strong. It was already breaking even before the pandemic broke out. We just need to make some adjustments to our distribution model and cost structure,” he says.

For 2QFY21, Hextar Global’s net profit fell 33% to RM7.44mil, from RM11.1mil a year ago while revenue fell 2% year-on-year to RM98.7mil.

The agrochemical group had blamed the reduced profits on lower revenue and gross profit margin, due to higher raw material prices and overhead costs.

Ong explains that the high raw material prices was due mainly to the disruption in the supply chain as well as logistics issues, resulting from the global pandemic.

“With our experience having been in this business for over 30 years, we had anticipated the impending rise in raw material prices and had stocked up on certain raw materials. Our raw materials do not have a shelf life and hence we are not limited by the expiry of our stocks. This allows us to manage our product costing more effectively. However, we were still affected by the increase in prices due to the prolonged disruption,” he says.

Ong notes that the group’s products are priced on a “cost plus”’ basis, and for shorter term supply contracts, margins are adjusted to reflect current market prices.

“In the interest of our long term relationship with our customers, we always work toward ensuring our products are priced competitively. For supply contracts which are based on tenders, prices are locked in for the period of the contract, for example, one year. In such cases, we would have to manage the purchase of raw materials to ensure that the cost is within the contract value and our margins are protected,” he explains.

He points out that the group had done well in 2QFY21 despite complying with the 60% workforce limit which was imposed from May 2021 and “only recently relaxed”, and added that the group also had to cease operations for two weeks in June due to movement restrictions.

Ong says he is optimistic about the outlook for the rest of the year and going into 2022.

“We should be completing the integration of the Chempro business, the Nobel Group and also Enra Kimia by end-2021 and can look toward consolidating their results. For Enra Kimia, the transaction is subject to the approval of the shareholders of Enra Group by end-2021. So, we have much reason to be optimistic and I am looking forward to begin 2022 as an enlarged and diversified chemicals group,” he says.

Ong says while the group has set itself growth targets for the next five years, he prefers not to reveal them.

“I believe that our track record in growing Hextar Global, from the time we merged our agrochemicals business with Halex Holdings two years ago, to where we are now, should be a good indication of the kind of growth rate which we are targeting.”

As for challenges, he says finding the right talents would be near the top of his list.

“As the M&A activities increase and our businesses continue to diversify, there will be an increasing need to hire capable talent to help manage these businesses effectively and efficiently,” says Ong.           

Source: The Star

Hextar Global to remain on M&A route for expansion

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GenetecTechnology Bhd is well-positioned to benefit from the growing demand for electric vehicles (EVs) and stationary energy storage (ES) solutions via its major customers in these sectors. 

Thus, CGS-CIMB Securities Sdn Bhd have raised the company’s target price to RM50 due to its undemanding valuation, robust earnings prospects amidst a rise in institutional funds’ holdings as well as narrowing valuation discount versus EV supply chain peers, and Genetec’s potential interest as an environmental, social and governance (ESG)-related play. 

“We initiate coverage on Genetec with an ‘Add’ and target price of RM50, based on 40 times calendar year (CY23F) and price-to-earnings (P/E), to one standard deviation of Malaysia’s Automated Test Equipment sector mean,” its analysts Walter AW and Mohd Shanaz Noor Azam wrote in a report yesterday. 

Genetec specialises in providing automation solutions for the downstream battery cell manufacturing process. 

From February 2021, Genetec has received a total of RM204.6 million in orders and 70% are from the EV and battery segments. 

“Its current orders in hand are worth 124% more than its average revenue of RM91.5 million for the financial year 2019 (FY19)-FY21,” the broker stated. 

The analysts also think the largest EV maker, Tesla Inc, could potentially be a Genetec customer as global demand for EVs is rising.

“Being the largest EV manufacturer globally and in the US, Tesla has the production volumes to justify usage of automation solutions in its production. Also, Genetec’s revenue contributions from the US has grown to 30% in FY21.

Note that Tesla’s manufacturing operations are currently located in the US,” the analysts stated. Genetec disclosed in its FY21 annual report that a new undisclosed client has become its third-largest customer by revenue contribution (RM28.2 million) compared to zero revenue contribution in FY20.

In addition, Tesla has specifically highlighted plans to further expand its production to make more affordable EVs and ES solutions in order to achieve the transition towards sustainable energy. 

CGS-CIMB projects Genetec to post a three-year core net profit compound annual growth rate of 235% (CY20-CY23F).

“This is due to the more orders from its EV customers, more contract wins from existing automotive clients (EV and non-EV related), and higher economies of scale,” they added.

CGS-CIMB has yet to account for any orders from other EV-based clients, more orders beyond the current job scope for its key EV client, and potential contracts from new businesses. 

“With its undemanding valuation, we believe Genetec should rerate from expected robust earnings, rise in institutional funds’ holdings, narrowing valuation discount versus EV supply chain peers, and potential interest as an ESG-related play,” the analysts said. 

The downside risks for Genetec would be the cancellation of major orders, losing Tesla as a client, and delays in customers’ growth plans. 

Genetec rose RM3.62 or 10% to RM39.50 at close of trade yesterday.  

Source: The Malaysian Reserve

Genetec is well positioned to boom from EVs and ES demand

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Organisational plasticity has always been the key “digital trait” of Serba Dinamik Group Bhd as it once again shows its capability in adapting to changes and innovating with speed.

On top of adjusting to the challenges of Covid-19, Serba Dinamik has moved up a notch with the rapid development of Smart Pengerang Eco-Industrial Park (Smart PeIP) and Pengerang International Commercial Centre (PICC) in Johor.

Serba Dinamik, a total technical engineering and commercial services provider, said it has now established a new ecosystem of infrastructure, facilities and providers of products and services housed within one location.

PeIP is poised to become a one-stop-centre to meet the needs for maintenance of plant and machinery.

It consists of Malaysia’s first smart MRO (maintenance, repair and overhaul) global centre of excellence, plant turnaround village, IRM (inspection, repair and maintenance) global centre, technical and vocational education and training city and smart logistics hub.

PICC, meanwhile, is incorporated to support PeIP with commercial, hospitality and residential properties along with other key facilities and amenities.

Serba Dinamik said in future proofing the productivity and sustainability of both PeIP and PICC as an industrial park and a commercial centre, the company was developing and deploying several key smart infrastructure.

The smart infrastructure planned for PeIP and PICC revolves around environment sustainability and smart city framework to create a smart entrepreneur community.

Mainly supported by Serba Dinamik’s subsidiary Serba Dinamik IT Solutions Sdn Bhd, the smart infrastructure encompasses smart mobility systems, smart warehouse technology, smart resident, automated surveillance system, eco-waste management, green lung and digital mall, among others.

“As a Malaysian-owned MRO centre, PeIP can enable the development of Malaysian companies to compete with international MRO players while pushing for local upskilling and job creation.

“Supported by Serba Dinamik’s 25 years of experience in the provision of MRO services and holistic vendor development programme, local vendors participating in PeIP are set for an immediate head-start to engage in MRO activities in the region,” the company said.

Tapping into Serba Dinamik’s global network and operations in Asia, Middle East, the UK and Africa, PeIP and PICC are well-equipped to attract foreign direct investments.

This, Serba Dinamik said, was based on opportunities from Johor’s Pengerang Integrated Petroleum Complex which includes Petronas’ PIC, Johor’s power generation industry as well as Singapore’s oil and gas, power generation and marine industries.

“The strategic location and multi-accessibility of PeIP also opens an opportunity for an export base to be established for manufactured parts, components and fabrication,” it added.

Currently progressing well in their development phase, PeIP and PICC have a combined gross development value of RM1.9 billion and gross development cost of RM1.7 billion.

This in turn could boost employment prospect in Johor as well as contribute positively to Malaysia’s gross domestic product growth, said Serba Dinamik.

Both projects are developed on 27.46 hectares with a gross floor area of 4.23 million sq ft and net floor area of 2.36 million sq ft.

Based on recent forecast, PeIP and PICC stand to create at least 6,000 new high-skilled and in-demand jobs for Malaysians.

“With the global Covid-19 pandemic having massively ushered the maturity of Industrial 4.0 which currently prove to be a necessity over luxury especially in MRO industry, the Smart PeIP and PICC can serve as the right catapult to push Malaysia into the lead as a high-tech global MRO service provider,” Serba Dinamik said.          

Source: NST

Smart infrastructure key to Serba Dinamik’s Pengerang projects

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