PIE Industrial invests RM60mil in plant revamp
03 Apr 2023
Electronic manufacturing services (EMS)-based PIE Industrial Bhd is investing about RM60mil to refurbish and renovate two plants as part of its expansion exercise to generate new revenue streams.
Group managing director Alvin Mui told StarBiz that the group will be spending some RM20mil to renovate a plant, which was previously leased out to a tenant.
This plant is scheduled for operation in the final quarter of 2023.
PIE is also investing RM40mil to refurbish a plant purchased two years ago and is slated to commence operations in early 2025, he added.
According to Mui, the group will use both facilities for the production of box-build products, which are targeted at the cloud computing, big data and medical device segments.
“We are now negotiating with new customers involved in these areas,” Mui said while expressing his confidence in getting most of the deals closed.
He stressed that PIE’s new business in box-build products will help to further drive the group’s growth.
For this year, Mui also expects that PIE Group will continue to register good growth.
“Our core EMS business in providing printed circuit board sub-assembly products to telecommunication devices, industrial electronic products and power tools will contribute about 45% of group revenue.
“Our box-build products for the super-computing and digital entertainment segments will contribute the remainder,” he noted.
PIE posted RM71mil in profit on the back of a RM1.16bil revenue for financial year 2022 (FY22).
Mui said, “For EMS activities, about 78% of the manufacturing segment orders were expected to increase from existing and potential new customers through its fully built-up vertical integrated manufacturing facilities.
“With a record RM1.16bil revenue in FY22, we are well-positioned for further strong growth in 2023.”
Furthermore, the overall global market is expecting an increase in demand for 5G, automotive, high-performance server, digital and home entertainment products.
“I believe such growth will contribute to and benefit our overall core product revenue growth in future.
“PIE is also in active discussions and engagement with a few potential new customers, which are essential to provide us with continuous business growth and diversity.
“Revenue derived from the manufacturing activity of raw wire and cable, about 20% of the manufacturing segment, will continue to grow with consistent profit margin,” explained Mui.
Meanwhile, there has been a trend in copper prices to increase since the end of FY20.
“However, this division can maintain its profit margin, as the selling price quoted to customers is periodically revised to reflect the latest market price for copper,” he added.
Mui also said the revenue from PIE Thailand (PIT) is expected to increase.
“This is because more orders are expected to be transferred from PIE to PIT since there is more available labour supply at PIT.
“Customers, in general, find it acceptable to have dual sites supporting the manufacturing of their products as a contingency measure,” he said.
In addition, PIT may have an opportunity to enter into the electric vehicle (EV) industry as a supplier of EV parts.
This is given Thailand’s rising EV manufacturing industry.
According to a recent Global Market Insights report, the EMS market size is expected to grow from US$500bil (RM2.2 trillion) in 2022 to US$1 trillion (RM4.4 trillion) in 2032.
This is an increase of a 5% compounded annual growth rate or CAGR for semiconductors and healthcare products.
Based on these products, EMS is likely to generate more than US$600bil (RM2.6 trillion) in 2032 because of the surge in demand for automotive electronics.
In 2022, Asia Pacific held 40% of the EMS market share, which in turn is expected to increase significantly between 2023 and 2032.
Source: The Star