PIE invests RM30mil to diversify product range
21 Aug 2023
These products are meant for high-end and critical devices and equipment in the aviation, medical and industrial electronic industries.
Group managing director Alvin Mui told StarBiz both plants will have some 400,000 sq ft of manufacturing space.
The plants will be equipped with new machinery and ready for production by the third quarter of 2023 and first quarter of 2024, respectively.
He said the group recently sealed contracts to produce the new products for US-based customers.
“We will begin with small-scale production for some of the products this year. We will ramp up production next year.
“The new business will contribute about 10% to the group’s revenue in 2024,” Mui added.
According to Mui, the aviation sector is one of the new areas with the potential to experience exponential growth.
The aviation market, covering manned and unmanned air vehicles, is expected to grow at a compounded annual growth rate (CAGR) of 2.95% from 2023 to 2028.
According to the Mordor Intelligence report on “Aviation Market Size and Share Analysis – Growth Trends and Forecasts (2023-2028)”, the aviation industry will increase to US$386.21bil (RM1.79 trillion) in 2028 from US$333.96bil (RM1.55 trillion) in 2023.
The report said several manufacturers are now focusing on developing newer generations of aircraft in various aviation segments.
“The newer generation aircraft offer improved fuel efficiency and safety for commercial and general aviation customers and better situational awareness and tactical advantage for military customers.
“The advent of such aircraft is expected to drive market growth during the forecast period,” it said.
Mui said one of the new contracts relates to developing box-built medical equipment to detect cancerous cells in mouth and throat.
“We will manufacture the PCBA boards and integrate the electronic components into a complete medical equipment unit,” he said.
According to a Research and Markets report, the global medical device market, valued at about US$562.6bil (RM2.6 trillion) in 2022, will grow at a 6.2% CAGR to hit US$695.2bil (RM3.2 trillion) in 2031.
“Factors such as an ageing population, increasing prevalence of chronic diseases and emerging markets with sizeable healthcare budgets will expand the medical device market,” Mui said.
According to Mui, the group will also produce PCBA modules for controllers used in smart homes and industrial electronic products to detect air quality in the environment.
The group’s primary source of revenue and profit now is from its manufacturing segment, contributing 99%.
“For electronic manufacturing services activities, comprising 83% of the manufacturing segment, orders have weakened since June from many existing customers.
“This situation may continue for the next few months,” Mui said.
The group remains optimistic about engaging new customers, mainly in server, medical, consumer and industrial industries, with ongoing discussions that could positively contribute to continuous growth, he said.
The group’s revenue from the manufacturing activity of raw wire and cable business, which constitutes 16% of payment, is also affected by the current slowdown.
“We expect business to pick up in the fourth quarter this year. There is an increasing trend in copper price since the end of 2020.
“However, this division can maintain its profit margin as the selling price quoted to customers is pegged to the copper price determined by the market,” he said.
Meanwhile, revenue from Pan International Thailand (PIT) is expected to increase as more business opportunities are now available in Thailand.
Mui said many new manufacturing activities are setting up operations in Thailand.
“In addition, PIT will have an excellent opportunity to enter into the electric vehicle (EV) industry as a supplier of EV wire harnesses, given the rising EV manufacturing industry in Thailand.
“The trading segment will continue to promote the products of the respective parent companies for customers in the Asean market,” he said.
Source: The Star