KUALA LUMPUR: Globetronics Technology Bhd has downplayed the impact of KPMG's resignation as its external auditor on its operations, saying the move is a normal part of the transition following the emergence of a new management in the semiconductor firm.
Globetronics executive chairman Liaw Way Gian told Business Times that this aligns with its strategic direction and will not affect its financial integrity.
On Sept 10, Globetronics shares tumbled 32.5 per cent or 26 sen lower to 54 sen after it announced KPMG had resigned on a voluntary basis.
Since then, the stock had gained nearly 13 per cent and last Friday, closed 0.83 per cent or half a sen higher to 61 sen for a market capitalisation of RM411.98 million.
Still, Globetronics share have lost 61.88 per cent so far this year.
"We have taken proactive measures to ensure seamless financial reporting by shortlisting potential new auditor, with the formal appointment pending. This move guarantees continuity, transparency, and alignment with our long-term goals," Liaw said in a recent interview..
KPMG's resignation, dated Sept 4, will take effect 21 days after the notice.
It was reappointed during Globetronics' last annual general meeting (AGM) on May 8 and was supposed to hold office until the conclusion of the company's next AGM.
In the meantime, Globetronics had shortlisted audit firm UHY Malaysia as its new auditor, pending the completion of official documentation to formalise the appointment, the company said.
Commenting on the rumours surrounding Globetronics, Liaw said it had certainly impacted perceptions of the company, adding that it is important to address that the speculations are unsubstantiated.
He said when the new management took over in December 2023, the company had inherited legacy book order shrinkage as well as investment policy and structural challenges.
The new management then decided to take painful and bold steps in the company's dividend policy, he said. This was necessary to reinvest in its fundamental technology platform and reposition for long-term growth, as it is an opportune time to acquire market share and customers.
He added that the management's primary focus has been to rectify these issues and position the company for sustainable growth.
Nevertheless, Liaw said Globetronics is currently engaged in discussions with several major multinational companies, exploring potential collaborations and business opportunities across its product lines.
He said these discussions are still in the early stages. "But they represent significant prospects for expanding the company's market presence and enhancing its offerings."
Addressing the decline in cash flow and increase in trade receivables, Liaw explained that the situation is primarily due to a strategic decision to allocate substantial deposits with multinational partners.
He noted that these deposits, which are held in stakeholders' accounts and managed by the company's legal advisors, are essential for securing new orders and forging strategic partnerships.
The approach is part of the stakeholders' broader strategy to expand and diversify the company's business, ensuring long-term growth.
"While this investment temporarily impacts our liquidity and receivables position, it reflects our commitment to establishing trust and demonstrating due diligence with our partners. These measures are crucial for building and strengthening relationships, as well as positioning Globetronics for future success and growth," he added.
"This approach reflects our commitment and due diligence in these negotiations, which may result in increased trade receivables on our balance sheet. The interest from leading global technology companies underscores our strong market position and highlights the potential for substantial future growth," Liaw said.
In its efforts to remain competitive in the rapidly changing industry, Globetronics is now focusing on the automotive, Internet of Things (IoT) and consumer electronics markets.
Liaw said the company's current efforts involve significant capital investment to advance the development of semiconductor solutions, leveraging the latest technology.
He said the strategic investment is essential to maintain its competitive edge in the rapidly evolving landscape.
"We are committed to developing innovative products that not only align with global trends towards smarter and more connected technologies but also anticipate and address emerging market demands.
"Our understanding of these sectors allows us to tailor our solutions to the specific needs of our clients, ensuring we deliver products that are both relevant and transformative.
"In addition to focusing on these core markets, we are also aiming to diversify our customer base and explore potential business diversification opportunities. This approach is designed to ensure continued revenue growth and stability, positioning the company to adapt to changing market conditions and capture new opportunities," he noted.
To ensure the company continues to move forward, Globetronics plans to allocate capital expenditure of RM120 million for the next two to three years.
This is for the upgrading of its technology and production facilities to support advanced packaging and micro-electro-mechanical systems technologies, as well as to meet future market demands.
Globetronics also adopts a comprehensive and proactive approach to securing new business opportunities and maintaining a strong growth trajectory.
Liaw said the company is dedicated to cultivating and strengthening relationships with both existing and potential clients, ensuring that it remain aligned with their evolving needs and expectations.
He added that the company's strategy includes exploring and forging strategic partnerships with key industry players.
"By leveraging synergies, we aim to enhance our market position and create new opportunities. We also place a strong emphasis on market intelligence, continuously monitoring industry trends and competitor activities.
"This enables us to stay ahead of potential disruptions and act swiftly on emerging opportunities, allowing us to adapt to changing conditions and seize new prospects proactively," he said.
Liaw said investing in cutting-edge technology and advancing the company's product offerings is also a cornerstone of its strategy.
This allows the company to effectively meet both current and future market demands, positioning it as a leader in providing relevant and transformative solutions.
Globetronics has also implemented robust risk management practices to navigate uncertainties effectively.
"These measures ensure that our business operations remain resilient and adaptable, enabling us to sustain growth despite external challenges. Overall, our multifaceted approach underscores our commitment to addressing the current market landscape while driving continuous growth and reinforcing our position in the industry," he said.