Cash-rich tech firms able to weather crisis

  • Corporate News
  • Monday, 03 Aug 2020

Pentamaster chairman C.B. Chuah told StarBiz that as of March 31, the group had RM426mil in net cash that could last the group for at least 60 months.

GEORGE TOWN: Penang-based technology companies involved in making semiconductor test equipment and sensors are in a healthy state to weather the current crisis.

Semiconductor test equipment manufacturers Pentamaster Corp Bhd and MMS Ventures Bhd, and sensor maker Globetronics Technology Bhd have net cash to sustain operations for the next 24 months to 60 months.

Pentamaster chairman C.B. Chuah told StarBiz that as of March 31, the group had RM426mil in net cash that could last the group for at least 60 months.

“The cash is sufficient to cover working capital, operational expenses, and salaries. The credit term for our trade receivables which is currently around RM100mil is regarded as healthy as it ranges between zero to 90 days.

“Our current ratio is 5.2 times, based on our existing assets of about RM570mil and liability of RM108mil, ” he said.

Chuah added that the group had a good book to bill ratio of 1.2, which means that the demand is greater than the capacity to supply.Globetronics Technology Bhd chief executive officer Datuk Heng Huck Lee said the group’s net cash of RM149.7mil as of June 30 would be able to cover the group’s operational expenses and working capital for 24 months.

“The credit term for our trade receivables is less than three months, ” he added.

The group’s current ratio is 5.9 times, based on existing assets of RM197.7mil and current liability of RM33.5mil.

MMS Ventures Bhd managing director T.K. Sia said the group’s net cash was about RM22mil, sufficient to cover its business operations and working capital for two to three years.

“The credit term of our trade receivables is about three months, while that of our current ratio is 15 times, ” he added.

According to Digitimes Research new smartphone report, the global shipment of smartphones is projected to drop to 1.15 billion units in 2020, down 15.4% from 2019’s 1.36 billion because of the impacts from the coronavirus pandemic.

“Weak end-market demand will undermine smartphone brands’ orders to original design manufacturers (ODMs) in the year with overall smartphone ODM shipments in 2020 to slip 13.6% on year to arrive at only 260 million units, ” according to Digitimes Research.

Digitimes Research says the worldwide top three smartphone ODMs are China-based Wingtech, Huaqin and Longcheer, and the three manufacturers are expected to continue expanding production capacities in China, South-East Asia and India in 2020.

According to the report, the three ODMs’ combined share of global smartphone shipments in 2020 is expected to rise to a new record.

“Still, each of them will see shipments in the year slip over 10% on year because of the pandemic’s impact on consumers’ demand for smartphones.

“Apple and Vivo are still developing their smartphones completely in house, and therefore, ODMs have been striving keenly for 4G and 5G smartphones orders from brands such as Samsung Electronics, Huawei, Oppo, Xiaomi and Lenovo, ” according to Digitimes Research.

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