The move to focus on the export markets for its products including transformers, lighting and electrical items was crucial as domestic demand was waning, said a company official.

Exports now accounted for 46% of group sales, and Success Transformer expected the contribution to the top line to be higher for the current year, he told The Edge Financial Daily.

Success Transformer had cash balance of RM19.4 million as of Dec 31, 2008, up 59% from RM12.2 million in 2007, and the funds would be used to expand the local operations.

So far, it had invested RM4 million in two factories under its subsidiary, Seremban Engineering Sdn Bhd (SESB), which makes heat exchangers, process equipment and non-pressure tanks for chemical and other industrial storage.

The two factories will increase the plants under SESB to six.

Apart from the RM4 million in the two factories, SESB is investing another RM3 million in a plant in Rawang to serve the food and pharmaceutical industries.

The official also said the RM9 million net profit guarantee by SESB, when Success Transformer acquired it in April last year, was expected to be on track.  In the first quarter ended March 31, 2009, SESB contributed 40% of the group revenue and 37% of its net profit.

“The biggest revenue contribution for SESB came from the palm oil industry. However, SESB recently moved into the oil & gas, pharmaceutical and food industries, all these were considered as resilient sectors,” said the official.

Success Transformer is not immune to the global economic slump, including the demand for transformers and electronics. In its latest report, SJ Securities Research forecast Success Transformer’s revenue growth to slow to 5% this year from 26.6% achieved in 2008.

This article appeared in The Edge Financial Daily, June 22, 2009.