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DNeX to grow SilTerra into global player

DNeX to grow SilTerra into global player

22 Jul 2021

SilTerra recorded a revenue of RM556.4m and a loss after tax of RM64.5m in FY20

Dagang NeXchange Bhd (DNeX) have set a two-year time frame to turn around wafer foundry SilTerra Malaysia Sdn Bhd and bring the company back to profitability.

“Our utmost priority now is to drive SilTerra’s transformation with the focus to increase plant utilisation, undertake cost optimisation and expand market access.

“These include initiatives to improve efficiencies and increase the company’s operational capacity as well as new capital investment to remove bottlenecks and improve plant utilisation,” Group MD Tan Sri Syed Zainal Abidin Syed Mohamed Tahir told The Malaysian Reserve.

In terms of the financial performance ofSilTerra, it recorded a revenue of RM556.39 million and a loss after tax of RM64.55 million in the financial year ended Dec 31, 2020 (FY20).

Syed Zainal Abidin said despite recording a loss, it was able to generate a positive net operating cashflow of RM22.07 million during the year.

“In addition, we will lead SilTerra to ready market access by leveraging on the network of our partner, including strategic customers and long-term supplier contracts.

“Also in the pipeline are the adoption of technology upgrades including micro-electromechanical system and silicon photonics thus enabling a change in product mix that can generate improved business margin,” he added.

He said the group aspiration is to transform DNeX into a global technology company, one that deploys technology to drive innovation and business growth in the sectors we operate which are information technology (IT) and energy.

“The acquisition of SilTerra is in line with these aspirations as DNeX will be involved in deploying the latest technology advancements to improve the businesses’ performance.

“Together with our partner Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre (Limited Partnership) (CGP Fund), we have big plans to grow SilTerra into a formidable technology player in the global marketplace,” he explained.

Shareholders of DNeX on June 23 approved the acquisition of a 60% equity interest SilTerra from Khazanah Nasional Bhd for a purchase consideration of RM163.8 million to be satisfied entirely by cash.

The shareholders also approved the proposed diversification of DNeX’s principal activities to include the manufacturing, sale and marketing of semiconductor wafers, semiconductor-related tools and other related activities.

DNeX have successfully secured a contract extension for the National Single Window (NSW) for trade facilitation from the government.

The contract extension is for a period of three years commencing from Sept 1, 2021 until Aug 31, 2024.

DNeX on June 14 announced Foxconn Singapore Pte Ltd, a subsidiary of Hon Hai Precision Industry Co Ltd, has emerged as a substantial shareholder of DNeX with a 5.03% stake or 120 million shares acquired from existing shareholders of DNeX.

Syed Zainal Abidin said Foxconn’s entry as a shareholder will be able to offer opportunities to unlock and create value across the high technology sector value chain and beyond.

“Potential areas of collaboration between DNeX and Foxconn would include semiconductor downstream products, electric vehicles and businesses related to the electric vehicle value chain.

“This is in line with our strategic goal in penetrating the booming electric vehicles market,” he said.

The Covid-19 pandemic has affected DNeX’s financial performance in 2020 across its business portfolio.

According to Syed Zainal Abidin, as the economic activities were disrupted by the various lockdown measures, trade transaction volume too was impacted in 2020.

“Consequently, our main revenue generator, NSW for trade facilitation, recorded a decrease in revenue contribution in 2020. Our energy division was not spared as well.

“Despite the setbacks, the long-term prospect of our business portfolios remains intact. The group worked on transforming adversity into opportunity and swiftly introduced new digital solutions that cater to the new norm, as well as seized opportunities to acquire undervalued assets that complement our expansion plans,” he said.

With efforts by the government to inoculate the citizens, DNeX is confident it will be able to capitalise on the nationwide economic recovery and be back on track for growth.

“Alongside our enlarged investment on Ping Petroleum Ltd and the acquisition of SilTerra, we are well positioned to ride on the growth trajectory across our business segments. It is our intention to possess a robust and diversified revenue portfolio, and we are now focused on strengthening our existing business portfolio,” he said.

Source: The Malaysian Reserve