Enovix deal set to drive YBS International

GEORGE TOWN: YBS International Bhd will assemble lithium-ion batteries for US-based lithium battery-producing giant Enovix from the third quarter of 2024, which will help the group return to profitability in financial year 2025 (FY25).

Group managing director Jackie Yong Chan Cheah told StarBiz that the group’s RM567mil facility in Penang Science Park would assemble lithium-ion batteries for use in Internet-of-Things wearables, two-way radios, smartphones, and laptops.

The group has a 10-year contract with Enovix to supply the company with lithium-ion batteries.

“This agreement is a testament to our dedication to high-quality products and services.

“It demonstrates our ability to meet the stringent standards of a leading lithium battery-producing company.

“While the contract’s financial details are confidential, we expect the lithium battery segment to significantly increase the revenue for FY25 ending March 31, 2025.

“We source the silicon anode, cathode, and separators – essential raw materials for battery production – from South Korea and Japan.

“The prices fluctuate, but we have an agreement to pass on the cost to our customer,” Yong added.

In FY24, the group generated RM7.5mil in after-tax loss on the back of RM98.6mil revenue, compared to RM3.1mil profit after tax and RM88.8mil achieved in FY23.

According to Azom, a leading online material science publication, the lithium battery industry’s market value will grow at a 20.3% compounded annual growth rate from 2024 to 2030.

In 2024, the lithium battery market value was about US$54.4bil.

Besides batteries, the plant will also focus on surface-mounting technology, cable assembly, connector assembly, precision machining and packaging activities.

Yong said the group’s key customers comprised world-class multinational corporations with annual revenues of US$30bil in each segment.

“The customers are in expansion and growth mode, and they have stable relations with us for the past 12 to 25 years,” he said.YBS is of the view that the business environment will remain volatile and challenging.

“In particular, any significant movement in the exchange rate between the ringgit and US dollar may result in foreign exchange gains or losses, which may also affect the group’s performance.

“The group’s performance in the next financial year is closely tied to the operational success of our new customer, Enovix. Their capability to implement the business plans effectively is crucial to our strategy and will significantly influence our financial results,” Yong said.

He added that the group remained cautious about the overall outlook and anticipated potential challenges in the next financial year.

“We remain steadfast in its commitment to improving cost efficiency and progress towards a stronger position in the market,” he added.

YBS’ new plant, with a 340,000-sq-ft production floor, sits on a 10-acre site in the Penang Science Park in Seberang Prai.