KUALA LUMPUR: VisDynamics Holdings Bhd is still open to any takeover offers to establish a more sustainable earnings stream, although its takeover bid of an Indonesian information technology (IT) firm fell through last year.

“All this while, we have [been receiving] all these inquiries,” said VisDynamics executive director and chief executive officer (CEO) Choy Ngee Hoe, adding corporates that are cash-rich, lowly geared with a low price-earnings ratio (PER), have always been takeover targets.

“There are parties (local and overseas) constantly talking to us, but there isn’t a suitable candidate yet,” Choy told The Edge Financial Daily in a recent interview.

“It is all [a] commercial deal ... if the price is right [and the deal] can bring the company to the next level, we would be considering it,” said Choy, who is also the single largest shareholder of the company with 30.53 million shares or a 27.58% stake.

According to Choy, VisDynamics, which is involved in the design, assembly and testing of back-end equipment in the automated test equipment industry for semiconductors, was recently approached by a local firm that expressed interest in taking over the company.

“The negotiation was at an early stage. The discussion was terminated after we announced our financial results for the financial year ended Oct 31, 2016 (FY16),” he said.

Following the announcement, Choy said the company’s share price surged substantially. Since it announced its FY16 financial performance on Dec 19 last year, VisDynamics shares had risen 71.4% to close at 48 sen last Friday, giving it a market value of RM53.1 million.

Recall that VisDynamics on April 22, 2015 announced its plan to acquire PT Cipta Srigati Lestari (CSL), which turned into a reverse takeover of the company, as the deal would be satisfied via the issuance of new shares. But the deal did not materialise despite an extension of 10 months. According to the company, this was due to the prevailing global economic condition as well as volatility in the Indonesian rupiah.

“It (CSL) was a very good company. [But] the currency crisis at that time had affected their operations as many of their costs are US dollar-denominated,” said Choy. CSL is principally engaged in the business of providing IT solutions in the smart card manufacturing industry.

VisDynamics posted a record net profit of RM4.3 million for FY16 compared to a loss of RM666,000 the previous year. Revenue jumped 2.9 times to RM27.47 million versus RM9.43 million.

The stronger financial performance was driven by an increase in sales of machines. Prior to this, its earnings had been volatile, sinking into the red for five years in FY08, FY09, FY12, FY13 and FY15 since listing in 2006, with net losses ranging from RM666,000 to RM1.49 million.

Based on the latest financial results, an analyst told The Edge Financial Daily that VisDynamics was valued relatively cheaper than its peer Vitrox Corp Bhd.

“Assuming they could maintain a net profit of RM2 million per quarter, the stock is trading at five times its PER, compared with Vitrox [which is] over 15 times,” said the analyst.

The analyst said VisDynamics’ earnings should be sustainable at the current pace, especially when more customers realise the company’s competitive edge as its equipment are designed and manufactured with simplicity, cost-effectiveness and best-in-class performance.

Moving forward, Choy said the group will introduce two new product models in FY17, which will fetch higher selling prices.

“We are optimistic about our business prospects,” he said, noting that global semiconductor sales have rebounded in recent months and several latest industry forecasts also project there would be small increases in 2017 and 2018.

“The high-end flash memories to be used in smartphones are in high demand,” said Choy, referring to three-dimensional (3D) memory chips, a new type of Nand flash memory with expanded storage capacity.

With 3D memory chips, it is possible to achieve higher densities at a lower cost per bit compared to a two-dimensional (2D)/planar Nand technology.

“The same flash memory can also be installed in self-driving cars as well as other equipment,” he highlighted.

According to Statista, the global market size for 2D and 3D Nand flash memories is expected to soar by more than 150% to US$80.3 billion (RM358.14 billion) between 2015 and 2025.

As of Oct 31, 2016, VisDynamics had fixed deposits, cash and bank balances of RM10.57 million, while its borrowings stood at RM2.82 million.

When asked how the company intends to utilise its cash, Choy said the board may consider declaring dividends and/or a bonus issue to reward shareholders.

“All these corporate exercises will come at various stages,” he added.

Choy is positive about the company’s earnings prospects for the next six months, as it has several machines to be delivered to its clients during that period.

“With the current orders in hand, we believe that the financial performance would be comparable to the latest quarterly earnings, barring any unforeseen circumstances,” he added.