KESM aims for another record year, to ride on auto sector growth

KUALA LUMPUR: KESM Industries Bhd, which tests semiconductor chips, is one of the few companies in the country that expects to chart a record year for its financial year ending July 31, 2017.
The semiconductor and burn-in test specialist achieved sales of RM285 million in FY16 and RM263 million in FY15.
Speaking to reporters after its AGM yesterday, executive chairman and CEO Sam Lim (pix) said it is working towards achieving RM300 million sales for FY17.
“Our goal for FY17 is to maintain our leadership position, ride on automotive growth and expand our market share,” he said.
KESM focuses on the automotive segment of the semiconductor industry but caters to clients in other sectors, such as commercial, industrial and military, as well.
“Our priority is to invest in anything the automotive industry requires and demands, that is our number one priority,” Lim said on boosting progress in the industry.
The automotive semiconductor market is valued at US$21.5 billion (RM96 billion) and is expected to reach US$28 billion (RM126 billion) at a compounded annual growth rate of 6.8% between 2016 and 2019. The most significant factor driving this market is the increasing projected production of cars.
KESM shares closed one sen lower at RM 9.85 yesterday, with some 98,200 units changing hands.
More than two thirds of the group’s revenue comes from Malaysia, while customers in China contribute about 20%, and those from other countries the remainder. Two customers alone contributed about 68% to the company’s revenue in 2016.
According to Lim, the rapid development of technology in the car market calls for more sophisticated and complex chips to be produced.
Given its profile as a company functioning in a capital-intensive industry, the company is on the lookout for funding options, he said, without elaborating further. The group had RM103. 7 million cash as at Oct 31, 2016.
The company runs on a capital expenditure ranging between RM 80 million and RM 90 million a year.
On KESM’s excellent performance in the past financial year, in which it grossed its highest earnings ever, Lim attributed it to strategic plannings on all levels.
Besides that, he said, the zero-defect policy which KESM is constantly striving for has made it unique among its customers.
KESM was established in 1978 and provides burn-in or testing services for semiconductor chips to ensure that the items are defect-free before they are shipped to customers.