JF Technology to partner with a Chinese smartphone giant to set up plant in China, sources say

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KUALA LUMPUR (Oct 23): JF Technology Bhd, whose share price soared to a record high today, will be partnering with a Chinese smartphone giant to set up a manufacturing plant in China, according to sources familiar with the plan.

The new investment is for the ACE Market-listed company to set a foothold in China. It is understood that the rationale to invest in a manufacturing plant in the mainland is to get a chance to be part of the supply chain in China's semiconductor industry.

However, details of the investment plan are sketchy. It is not known the amount JF Technology will need to pour in for the new production facilities as well as the partnership structure between the group and the smartphone giant.

JF Technology is expected to reveal the details of the plan, among others, on coming Monday.

JF Technology, which specialises in test sockets manufacturing, has made a request to the stock exchange to suspend trading of its securities on coming Monday, pending on "material announcements", according to a filing with Bursa Malaysia after the trading hours today.

"The request for suspension is made under Paragraph 3.1(c) of Guidance Note 12 of the ACE Market Listing Requirements of Bursa Malaysia Securities," the filing said.

JF Technology's shares were 23 sen or 5.03% higher to close at an all-time high of RM4.80 today, making it the fifth-largest gainer on Bursa Malaysia. Some 12.9 million shares were traded today.

Year-to-date, the stock has rallied more than three times (216%), from RM1.52. This brings its market capitalisation to RM1.08 billion, from RM343.14 million at the beginning of this year.

It is apparent that the trade tension between the US and China has spilled over to the semiconductor industry. Huawei is in the centre of the trade tension. Last year, US President Donald Trump blacklisted Huawei amid the Sino-US trade spat, which effectively cut off US chipmakers from the supply chain of Huawei.

Huawei has made it known that it will have to stop its production of its latest model of smartphone due to shortage of semiconductor chips.

It was reported earlier today that Huawei had to stockpile critical radio chips ahead of Trump's sanctions, ensuring that it could have enough to supply for the US$170 billion roll-out of 5G technology through at least 2021.

A large bulk or 34% of JF Technology's total revenue for the full financial year ended June 30, 2020 came from its customers in China, followed by Malaysia (25%), the US (11%), the Philippines (9%), Thailand (7%), Taiwan (6%) and other countries (7%).

For its fourth quarter ended June 30, 2020, the company registered a net profit of RM3.09 million, against a net loss of RM656,000 in the same period last year, while quarterly revenue was also up 60% to RM8.13 million, from RM5.08 million.

The company attributed its profitability in the quarter to "much stronger demand" from its customers overseas as well as lower operating expenses, notwithstanding the Movement Control Order as a result of the Covid-19 pandemic.

Its annual net profit for the full year ended June 30, 2020 more than doubled to RM8.02 million, from RM3.02 million, while revenue grew 16.5% to RM26.82 million, from RM23.03 million.

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Trading of JF Technology shares to be suspended next Monday, pending 'material announcement'

Kathy Fong