KUALA LUMPUR (Nov 30): EG Industries Bhd has clinched new orders for box-build products worth approximately RM150 million, which is expected to be recognised in financial year ending June 30, 2016 (FY16).
In a statement today, EG Industries revealed the orders entail undertaking end-to-manufacturing services, from designing to shipping of completed products to customers' end users.
"Of the RM150 million of orders, RM25 million for the box-build of ICT (information and communications technology) and consumer electronic products has been recognised in 1QFY16, with the balance to be recognised for the rest of FY16," said EG Industries' group chief executive officer cum executive director Alex Kang.
"We anticipate the revenue contribution from [the] box-build segment to increase to 20% in FY16, from approximately 10% a year ago," he added.
Kang said EG Industries is re-strategising to enhance its bottom line by changing product mix to have additional revenue from the box-build segment, to complement the current expertise in printed circuit board assembly.
"Securing these box-build orders enables us to move up the value chain and reiterate our position as a vertically integrated EMS (electronic manufacturing services) provider," he said.
Meanwhile, EG Industries also announced its first quarter ended Sept 30, 2015 (1QFY16) results, which saw net profit fall by 33.35% to RM5.04 million or 6.56 per share, from RM7.56 million or 10.09 sen per share, due to absence of a gain on disposal of other investments of RM6.7 million in 1QFY15.
In its quarterly report to Bursa Malaysia, the group said netting off gain on disposal of other investments, EG Industries' profit before tax grew to RM5.34 million for the quarter under review, approximately 5.2 times or RM4.31 million, from RM1.03 million in 1QFY15.
EG Industries noted the profitability was mainly driven by favourable product mix and enhanced operational efficiency.
Nevertheless, the group's revenue for 1QFY16 fell 1.45% to RM190.88 million, from RM193.69 million a year ago, due to a change of product sales mix to focus on high margin products.
Moving forward, EG Industries said it will continue to focus on exploring new market opportunities, engaging new customers, and improving its design and development capabilities to offer one-stop electronic manufacturing services (EMS) solution to its customers.
Additionally, it also pledged to enhance its operational and cost efficiencies by taking prudent measures to achieve satisfactory results. The group expects FY16 results to remain positive.
Commenting on 1QFY16 results, Kang sees it as a positive start for the group.
"We believe we will reap greater operational efficiency with the anticipated growth in sales orders going forward, thus benefiting our performance in future," he said.
EG Industries shares closed two sen or 2.4% lower at 81.5 sen today, giving it a market capitalisation of RM160.4 million.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive value)