KUALA LUMPUR: K-One Technology Bhd (KOT), an electronic manufacturing services (EMS) is banking on 'sunrise industries' from this year onwards as these product portfolios yield higher margins and have longer product life cycles.
Executive chairman Edwin Lim Beng Fook said internet of things (IoT) devices, medical/healthcare products, electronic security/surveillance solutions, electronic wearables, and automotive aggregates will be the way forward for the company in earning new income streams.
"We have prepared the necessary foundations for this new venture, such as getting the necessary certifications such ISO 13485 and US Food and Drug Administration (FDA) certification for healthcare/medical devices development and manufacturing.
"And after putting up cleanroom facilities, we strongly believe the traction in these industries will have an accelerated growth momentum in the years to come," he told The New Straits Times recently.
He said since the company exited from the mobile phone accessories business, it has been scouting for new business opportunities as replacement business.
To a question on synergies expected post 60 per cent stake acquisition of G-Asia Pacific Sdn Bhd (GAP), Edwin said the acquisition will complement the Group’s existing principle activities in the value chain and ecosystem under the auspices of Industry 4.0, which is also part of its digital transformation process.
To recap, in March this year, KOT completed the acquisition of GAP, cloud computing company, for RM20.4 million cash.
Edwin was also quoted saying GAP, which is already the market leader in Malaysia, will venture into neighboring countries such as Thailand, Indonesia, The Philippines and Vietnam, followed by Singapore in its second phase of expansion and then to Cambodia, Myanmar and Laos.
"Our core business – EMS had witnessed an increasing shift towards the development and manufacturing of products which are IoT enabled over the last couple of years.
"Our digital transformation initiative is also pushing us to transform our manufacturing hub towards smart manufacturing as part of our Industry 4.0 attainment, so that we can maintain our competitiveness by automating processes to reduce costs and improve productivity," he said.
Edwin said in smart manufacturing and any digital transformation process in any industry, cloud computing is the critical enabler to integrate software and hardware to produce meaningful data for analytics and real-time actions as appropriate for improved efficiency and planning.
"In fact, we are currently combining GAP’s cloud software expertise and KOT’s IoT hardware competency and working in conjunction with AWS (Amazon Web Services) to develop integrated solutions for applications in various industries, such as manufacturing, logistics and security services," he said.
Touching on financials, KOT achieved a profit of RM1.7 million in the first quarter (1Q) financial year (FY) 2019, which is already 30 per cent of the profit in
FY2018.
This is on the back of a usually weaker first quarter which is in line with its business cycle.
"For our EMS business, we have achieved a major milestone at the end of 2018, where we are now registered with the US FDA.
"This would provide the key for the Group to manufacture medical/healthcare products which require FDA registrations which are aplenty.
"We intend to tap on the opportunities that arise from the looming unsettled US-China trade war, where more US-based customers are now more open to diversify their manufacturing bases in China to South-East Asia," he said.
As for the cloud computing business, Edwin said it is an exciting space to be in as it has vast untapped potentials, both in Malaysia and ASEAN.
"We are excited to work with the co-founders of GAP to unlock these potentials as quick as we can. Therefore, we expect to achieve improved business results moving forward, barring unforeseen circumstances," he said.