Kobay Technology optimistic about near-term order visibility

PETALING JAYA: Kobay Technology Bhd is confident of its order visibility for the next three months as it focuses on its core capabilities of supplying mechanical components for advanced data servers (ADS), despite the soft demand of digital currency.

The technology company had secured a project for an ADS machine at the end of its financial year ended June 30, 2021 (FY21).

In a report on Kobay, Hong Leong Investment Bank (HLIB) Research said following discussions with its customers, Kobay had put the surface-mount technology (SMT) portion of the work on halt and would focus on the capability of supplying the mechanical components.

The group is actively exploring new opportunities to utilise the readily available SMT line, due to its investment of about RM20mil in Innospec, a new SMT services subsidiary which provides an end-to-end complete solution for ADS.

“We understand discussions have been taking place with customers and Kobay is confidentyhat they will be able to start utilising the capacity soon,” HLIB Research pointed out.

The research house said the group is in the final stage of preparation work for its venture into the manufacturing of aluminium frames for solar panels for renewable energy-related business, further expanding its clientele exposure. “Kobay has already completed the renovation and installation of the new 15-acre plant dedicated for renewable energy related business,” it said, adding there had been a slight delay in terms of approvals from the authorities.

“The group is still awaiting the electrical connection from the power substation upgrade by Tenaga Nasional Bhd before moving ahead with customer qualifications,” it added.

Kobay’s new business segment, namely electronics manufacturing services and solar, will be an additional bonus for the group, as its core business from manufacturing, which benefitted from surge in demand from semiconductor and electrical and electronics (E&E) industries had contributed healthily.More importantly, Kobay said its FY23 expansion would be largely driven by the organic growth of its core business with a set target of between 50% and 80%.

“Semiconductor and E&E contributed the large chunk of 58% of group revenue, followed by 5% from aerospace and 7% from property segment,” HLIB Research said.

The research house said Kobay’s property development segment would likely recover on the back of the completion of its Langkawi projects by the end of 2022.

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