This article first appeared in The Edge Malaysia Weekly on August 28, 2017 - September 3, 2017

Johor-based VS Industry Bhd has made a name for itself assembling products that, for the most part, the company cannot name. Bound by non-disclosure agreements, managing director Datuk Gan Sem Yam has to keep mum about the top-shelf electronic appliances that are assembled at the group’s plant in Senai.

Fortunately, the group’s bottom line is able to do the talking.

For the nine months ended July 31, 2017, VS Industry posted revenue and net profit of RM2.3 billion and RM119.5 million respectively. This marks a 41.7% and 11.7% increase from the previous year. This strong growth trajectory stems from the group’s expansion of new production lines and its venture into new personal care products — also top-shelf. While a net profit for FY2016 of RM117.9 million was smaller than RM132.7 million in FY2015, it is still more than double the RM43.9 million booked in FY2013.

Its stock price has jumped nearly 700% to RM2.054 on June 30 this year, from 25.9 sen just over three years ago on March 31, 2014, translating into an 89% annualised total return for the period. As a result, VS Industry bags the best return for shareholders over a three-year period for the Industrial Products sector in The Edge’s 2017 Billion Ringgit Club awards.

“We are expanding rapidly and expect our production output to reach record high this year as well as next year,” Gan tells The Edge.

The group’s share price certainly reflects such expectations. Closing at RM2.18 on Aug 15, VS Industry’s share price has gained 56% year on year. This gives the company a market cap of RM2.6 billion.

“We are currently the largest homegrown electronics manufacturing services (EMS) provider in Malaysia, top five in Asean and ranked 28th in the world (based on 2016 revenue).

“We believe we can further improve our ranking in the world. But more importantly, we want to continue growing and be a dominant EMS player in the region — be it in terms of revenue, profitability or reputation,” he says.

Gan also points out that size alone is not enough. The group also sets itself apart as a one-stop vertically integrated EMS provider.

“We offer complete solutions from product design R&D to prototyping, testing, production, quality control and logistics fulfilment. And from a production viewpoint, as a vertically integrated provider, we have all the processes (tooling, plastic injection, PCB assembly and box-build assembly capabilities) in-house under one roof,” he explains.

This allows VS industry to offer better quality control and shorter production lead times.

“Today, we believe we have achieved high level of expertise in complex EMS processes and are capable of producing increasingly higher-value added consumer products,” says Gan.

He boasts that the group is now capable of taking on complex design jobs as well as high-volume orders. “Our capabilities are on par with other large international EMS players in the world,” he declares.

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