APM Automotive remains a long-term buy for analysts as the group has itself as an exporter of autoparts to the world
KUALA LUMPUR: APM Automotive Holdings Bhd
, which is already making suspension parts in Vietnam, plans to have a joint venture to develop, manufacture and sell automotive seats there.
In a filing with Bursa Malaysia, the Tan Chong group member said its indirect unit, APM Automotive IndoChina Ltd, had signed a JV agreement with Tachi-S Co’s unit Tachi-S (Thailand) Co Ltd to carry out the business in the republic for the original equipment manufacturers.
Tachi-S (Thailand) is a wholly-owned subsidiary of Tachi-S Co Ltd, a Japanese automotive seat system company that is a JV partner with one of APM’s subsidiaries in Malaysia.
They may also enter other businesses deemed beneficial to the main line of business including the manufacture of new products, said APM, whose automotive parts also cover inerior/exterior plastics and electrical products such as air-conditioning systems and radiators.
APM said the JV company would also participate in the joint development of automotive seats for customers requiring seat design development.
APM Automotive IndoChina will hold 49% in a new JV firm to be incorporated in Vietnam under the proposed name APM Tachi-S Seating Systems Vietnam Co Ltd, which will have an investment capital and charter capital of US$2.5mil (RM10.06mil).
Tachi-S (Thailand) was set up in 2011 to supervise the operations of the Tachi-S Group in India and the Asean region.
“This JV arrangement is in line with the expansion plan of APM Group to increase its market share in markets outside Malaysia. The JV will enable both parties to leverage on each other’s knowledge and experience to bring greater synergy in their expertise and know-how in the design, development, manufacture, assembly and sales of automotive seats,” APM said.
Based on APM’s annual report, the group’s operations outside Malaysia contributed 10% of its revenue for the financial year ended Dec 31, 2015, up from 6% in the previous year. Last year’s total revenue, however, was 6.1% lower amid the difficult economic environment.
Besides Malaysia and Vietnam, APM also has manufacturing facilities in Indonesia and Australia.
According to the company, the automotive industry is poised to grow in the emerging markets in the Asean region. “The board believes that the timing of the JV is appropriate to capture the opportunities to expand our current seat business overseas,” it said.
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