This article first appeared in The Edge Financial Daily, on April 28, 2016.

BAYAN LEPAS: ACE Market-listed MMS Ventures Bhd (MMSV), which is involved in the design and manufacturing of light-emitting diode (LED) testers, expects sales growth of between 10% and 20% in the first half of its financial year ending June 30, 2016 (1HFY16).

According to MMSV chairman and chief executive officer Sia Teik Keat, the group is banking on its automotive sector to drive its sales growth in 1HFY16.

“In the automotive sector, we build the machines for our customers, who are LED makers such as Osram and Lumileds, to inspect and test the quality of automotive parts that have LED functions, for example, the tail lights and headlights of vehicles.

“At present, the automotive sector contributes about 30% of our sales to date; this is an improvement from last year when the sector only contributed 20% of our sales. So our sales growth for 1HFY16 will be driven by the automotive sector,” Sia told reporters after the company’s annual general meeting yesterday.

The company’s principal activities are divided into three core segments: general lighting, automotive and smart devices.

“General lighting contributes 40% of our revenue, while automotive and smart devices contribute 30% each. However, when it comes to profit margins, our automotive and smart devices segments tend to have higher margins,” said Sia.

MMSV’s order book for 1HFY16 stands at RM18 million.

According to Sia, approximately 60% of MMSV’s customers are abroad, mainly the United States and Europe, while the remaining 40% are locally based multinational corporations (MNCs).

“With the majority of our customer base being in overseas markets, we do [enjoy foreign-exchange gains] when there is an appreciation in the US dollar, and vice versa when the ringgit strengthens, but we also sell to local MNCs in ringgit so it balances for us,” said Sia.

He added that the company’s diverse segment base is an advantage to the company.

“For example, if there is a slowdown in the automotive sector, we would still have our smart devices and general lighting segments [to fall back on], and the same applies if there is a slowdown in our other two segments; we are diversified as far as market segments are concerned,” said Sia.

For FY15 ended Dec 31, 2015, MMSV reported a net profit of RM8.08 million, down 22.7% from RM10.45 million achieved in FY14, due to lower volume of machines sold.

Annual revenue for FY15 shrank 21.2% to RM31.29 million, from RM39.69 million in FY14.