This article first appeared in The Edge Financial Daily on August 17, 2018

KUALA LUMPUR: Homegrown high-performance test contacting solutions provider, JF Technology Bhd (JF Tech) said it stands to benefit from the trade conflict between the US and China.

JF Tech’s managing director and chief executive officer, Datuk Foong Wei Kuong, told The Edge Financial Daily that some of its associates in China and the US are exploring the possibility of moving parts or entire operations to Malaysia due to concerns over the impact of tariffs on their operations.

“Last July at the Semicon West Show (a notable semiconductor trade show and conference), we met a few associates from China and the US. They were looking to explore moving part or entire operations of theirs to Malaysia because of the tariffs,” Foong said in an email exchange.

This could lead to business cooperation between JF Tech and these associates, he said.

China and the US has engaged in a full-blown trade war this year with both sides slapping tariffs on billions worth of goods ranging from steel, aluminium and cars to agricultural products.

Meanwhile, Foong believed that the financials for JF Tech will improve moving forward, given the worst from the lawsuit that was announced has largely been priced in by investors.

Recall that on Aug 7, JF Tech said that the United States District Court for the Northern District of California, has made an order awarding Johnstech International Corp damages in the sum of US$1.51 million (RM6.19 million). However, Johnstech’s motion for the attorney’s fees to be paid by JF Tech was refused.

JF Tech indicated that it will appeal against the judgement of the court. The lawsuit was related to a patent infringement filed by Johnstech against JF Tech.

Foong said JF Tech’s management does not believe it has infringed on its competitors’ intellectual property rights.

“For our financials, it can only be better moving forward as the worst of the lawsuit was announced and factored in, so for FY2019 and beyond, our performance can only be a promising one. What if we turn the judgement to our favour in the Appeal Court? We strongly believe we have not infringed on our competitor as a matter of law,” he said.

When the announcement was made, JF Tech’s share price fell by 5.3% to 72 sen.

Nonetheless, investors who have bought into JF Tech following the decline would have posted paper gains as its counter bucked the market downtrend yesterday when it surged by 20.1% to close at 92.5 sen, on over 1.8 million shares traded.

The group was one of the 190 counters that have managed to climb into positive territory during yesterday’s trade amid a market rout seen, following the weakness of the Turkish lira that spilled over to emerging-market currencies.

Foong said that he was unaware of the reasons for the surge in the group’s share price but pointed out that JF Tech’s share price has been lagging behind its peers and is only playing catch-up at the moment.

Based on the group’s closing price of 92.5 sen, JF Tech was trading at a trailing price-earnings ratio (PER) of 27.2 times. In comparison, the PER for the Bursa Malaysia Technology Index was 39 times.

Other than that, Foong also noted that investors were probably looking at the JF Tech’s potential given the current weakness in the ringgit as its revenue are mainly from exports.