AT Systemization eyes to diversify businesses

PETALING JAYA: AT Systemization Bhd, which is on the lookout for new business under a diversification plan, is eyeing an ideal revenue contribution of 20% from new businesses in the financial ending Feb 28, 2016 (FY16) while its existing business of industrial automation systems and machinery business brings in the remaining 80%.
In achieving its goal, executive director Mak Siew Wei (pix) said AT is in talks to participate in small scale property development, machines related to glove industry or palm oil related matters, with an eye to securing some new businesses next year. Nothing has been finalised thus far.
The ACE Market-listed group's revenue comes entirely from design and manufacturing of industrial automation system and machinery as well as the fabrication of industrial and engineering parts.
"Moving forward, the key thing is to get our core business into a more profitable position and increasing the group's turnover. Nonetheless, we will also be on the lookout for any other opportunities that can benefit the company. We need to look at possible new ventures to further diversify the group's risks," he told SunBiz in an interview recently.
Mak, who is also the executive director of Scan Associates Bhd and Advance Information Marketing Bhd, said AT's existing business is sound but in the risk management aspect, he would not want to put everything in one basket.
"We're open (to any new businesses) but we don't want to rush into a venture unless it's deemed safe," he said, adding that any diversification will not mean a change in direction for AT.
"To venture into (property for example), it's a matter of getting the right expertise or partner. We're not going into major development where we don't have the expertise. If we do go into it, highly likely it will be on a partnership basis whereby we would be very much dependent on our partner's strength.
"The key is not to stretch our finances too much. We're not a large company so we will do what (is within our capabilities)," he said.
For the current FY15, Mak thinks the group will be profitable operationally, on the back of the existing factories in Penang, and will strive to improve its current results.
He said the group is investing RM5 million to build a new factory facility adjacent to its existing factory in Bayan Lepas, Penang as well as RM1.2 million to buy new machineries for the industrial automation system business. The targeted completion date of the construction of the new factory is February 2015 and it is aimed to be operational by March 2015. By then, AT will have three factories in the Bayan Lepas Industrial Area.
The new factory will involve an extension of 14,000 sq ft of space and production capacity is expected to go up from 6,000 units per month to 10,000 units per month. Nevertheless, contribution of profit attributable to the new factory might not synergise with production output in term of percentage due to new financing commitment and the group expects to catch up in two years.
The group will also resubmit its tender to the Sustainable Energy Development Authority by year-end or early next year to set up a solar energy power farm at its factory in Bayan Lepas, of which the solar energy power farm can potentially offer recurrent income stream during the concession periods.
Mak said the group did not succeed in its first tender as selection was through a balloting process. As a second time applicant, AT will have priority in the balloting process.
"We will try again to go into it because that would give us some diversification in terms of risk management. This is a minimal risk venture," said Mak.
AT, which was unsuccessful in bidding for the international tender for the construction of a mass-scale incinerator facility for a waste-to-energy public private partnership project at Kepong from the government, will seek to obtain jobs from the winner of the project, at the same time explore similar collaborations at other locations such as Sg Udang, Malacca, and Batu Pahat, Johor. Its cash reserves stood at RM16.38 million as at May 31, 2014.