Genetec set to ride on expanding global EV market

PETALING JAYA: Ace Market-listed Genetec Technology Bhd is expected to reap the benefits of the growing electric vehicle (EV) space, as countries worldwide continue to ramp-up production of such vehicles.

Citing the Global EV Outlook 2021 that was published by the International Energy Agency in April, CGS-CIMB said the global electric car stock reached 10.2 million in 2020, which was a 43% year-on-year (y-o-y) growth.

“In 2020, China had the largest electric car fleet with 4.5 million units, followed by Europe with 3.2 million, ” the research house said in a report.

It noted that although the global car market shrank by 16% y-o-y in 2020 due to the negative impact of the Covid-19 pandemic on the economy, global electric car sales still rose 51% y-o-y to 3.1 million units last year.

“Overall, the market share of electric cars in the global car market (volume) grew from 2.6% in 2019 to 4.6% in 2020.

“The stronger demand for electric cars was led by Europe with 1.4 million new registrations, followed by China and the United States with 1.2 million and 295, 000, respectively.”

CGS-CIMB noted that Genetec recently announced it had secured RM204.6mil worth of orders across multiple-end applications such as EV and battery, automotive, hard-disk drives and consumer electronics.

“EV and battery orders made up 93% or RM189.4mil of its total secured orders from February to date.

“Based on these new projects, its outstanding order book is 2.1-times its total 2021 revenue. Genetec states that the length of these projects normally range from three to nine months.”

Genetec is primarily involved in the design and production of automation systems. Its products and services cater to various industries, focusing on EVs, hard disk drives and electronic industries.

For its financial year ended March 31, 2021, the company’s revenue rose 20.9% y-o-y to RM97.1mil, mainly due to higher sales volume.

CGS-CIMB noted that Genetec recorded a pre-tax loss of RM4.8mil in 2021.

“According to Genetec, the wider loss in 2021 was mainly due to less profitable product mix, higher operating costs and increase in development costs for future projects.

“This is notwithstanding several one-off items such as RM2.8mil in respect of share-based payment from granting of share options to eligible directors and employees, as well as foreign exchange losses.”

The bulk of Genetec’s revenue is derived from overseas markets, which contribute around 87% to its topline.

“The bulk of its overseas revenue is derived from Europe, China and Thailand, while revenue from the United States only contributed 1% to its 2020 revenue.

“Genetec has stated plans to increase sales to this region, moving forward, in tandem with its plans to expand further into the EV market, ” said CGS-CIMB.