GEORGE TOWN: Rising orders for PIE Industrial Bhd’s security and industrial printed circuit board assembly (PCBA) products will help the group navigate through a tough and challenging year.
Group managing director Alvin Mui told StarBiz that orders for PCBA products and industrial and security box-built products in the second half are expected to improve by about a fifth over the first half, riding on orders from customers in the US and Europe.
The contribution to revenue from security and industrial PCBA products would improve to over a third this year from less than 20% a year ago, according to Mui.
“The security market in the US is expected to grow to US$20bil in 2016 because it covers a broad range of products such as critical telecommunication devices, smart cards and biometrics as well as mechanical and electromechanical locks and access controls.
“Our market is more focused on the critical telecommunications sector in the US and Europe,” he said.
In the first quarter of 2016, the group posted RM2mil in net profit on the back of RM119.7mil turnover, compared to RM10.2mil and RM111mil achieved in the previous corresponding period.
“We expect the performance of the second quarter to be better than the first quarter despite the continuing global slowdown,” he said, adding that although the global economy had not fully recovered, PIE was getting good orders because of its capability to provide cost-effective integrated manufacturing solutions.
“We build most of the parts in-house, so the customers don’t need so many other suppliers for their box-built products,” he said.
Mui said the group had recently set up a new metal stamping division at one of its plants in Seberang Jaya, which will be operational in the second half of this year.
Its computer numerical control (CNC) precision tooling division will begin operations next year in a new RM20mil facility in Seberang Jaya.
“The CNC division will support our box-built products and provide plastic and metal mould fabrication services. This will broaden our revenue base. This will enable us to cut down substantially on the lead time and travelling cost incurred in the plastic and metal mould fabrication process,” he added.
On the group’s bottomline for 2016, Mui said it would be impacted as the ringgit had strengthened by 10% to RM3.90 to US$1 in the first quarter of 2016.
“In the fourth quarter of last year, the exchange rate was RM4.30 to US$1. Now, it is fluctuating around RM4 to US$1,” he said.
According to Freedonia, a Cleveland-based market research firm, the US market for security products and systems is expected to be US$19.9bil in 2016.
“Rebounds in construction and capital investment spending are expected to be the primary growth drivers. A perceived high risk in crime and technological improvements to security technology will play a role,” the report said.