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KESM unfazed by market downturn, to invest in new factory space in Malacca

KESM unfazed by market downturn, to invest in new factory space in Malacca

07 Jan 2021

KESM Industries Bhd will be investing in new factory space in Malacca with over 100,000 square feet to support future growth in burn-in and test of automotive semiconductors, according to its executive chairman and CEO, Sam Lim.

“We are taking a long-term view that the global car market will turn around and continue to grow,” Lim said in a statement.

He pointed out that the group serves five of the top 10 largest car semiconductor manufacturers in the world and the move towards electric and autonomous vehicles will see increased semiconductor content per vehicle.

Semiconductor reliability is a top safety concern for all new car designs, the executive chairman pointed out.

In tandem with governments’ support across the world for reduced emissions from cars, KESM is ready to ride the wave of the electric vehicle revolution.

Lim acknowledged the global car market weakened significantly last year, although the increase in semiconductor content used in cars has offset the decline in production volumes.

However, the challenges brought about by the Covid-19 pandemic are still far from over.

Despite the significant drop in volume, the group’s balance sheet remains strong as its cash pile strengthened to RM230 million from RM200 million.

On the back of its performance, its board declared an interim dividend of 1.5 sen per ordinary share, totalling RM600,000 on Aug 25, 2020 as well as a final tax-exempt dividend of 6 sen per share.

Collectively, Lim pointed out, the two dividends of 7.5 sen have translated into a high dividend payout ratio in spite of a weak performance.

“We operate in a highly capitalised market. With our strong financial health, we are taking advantage of this lull period to invest in training, upgrade our equipment and to benefit from the growing global automotive industry when the chips are up,” he said.

When the pandemic restriction gradually relaxes, the CEO projected to see a faster rate of recovery in its business activities.

Source: The Sun Daily

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