PIE Industrial to experience better prospects over medium term
KUCHING: P. I. E. Industrial Bhd (PIE Industrial) is poised to experience improved prospects for its business over the shortto-medium term period.
Following a company’s briefing, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) in a report yesterday said it was positive on the group’s brighter outlook for financial year 2017 (FY17) ending December 2017.
The research firm believed that PIE Industrial’s mid-term prospect will be anchored by new pipeline of projects that will be sufficient to offset the company’s set- top business ( STB) sales shortfall.
Subsequent to the discussion with the company’s management, Kenanga Research foresees more positive catalysts brewing for PIE Industrial that could drive the group way beyond the current level of business.
“There are four new projects which are on the negotiation stage by the company with one of the projects close to be sealed apart from organic growth pursued by the group,” it said.
“Those projects are to be awarded by existing and new customers with one being an original design manufacturing ( ODM) project with a worldrenowned multinational company.”
Assuming that the ODM project goes well, Kenanga Research said it could be a door-opening opportunity for the group to tap into increased orders going forward.
Nonetheless, the research firm remained conservative in its assumption for the company’s earnings for FY17.
On another note, it gathered that PIE Industrial will not incur major capital expenditure as the company’s existing facilities are sufficient to take up increased orders.
“The group is playing it safe by relocating part of the company’s orders to its plant in Thailand,” it highlighted.
Meanwhile, the research firm was “positively surprised” to gather that more orders are flowing in from the company’s existing customers due to the growing confidence in the group’s capability.
Currently, PIE Industrial is ramping up orders from all the customers alongside improving operational efficiency as well as subsiding labour issues.
In the meantime, the research firm observed that FY16 ended December 2016 was a transition year for the group with a turnaround registered in the group’s financial results for the fourth quarter of 2016 (4Q16) ended December 2016.
“PIE Industrial recorded a strong core net profit of RM24.9 million in 4Q16, represented an increase of 414 per cent quarteron-quarter as compared with 3Q16.
“The group’s strong core net profit recorded in 4Q16 has demonstrated PIE Industrial’s strength as an electronics manufacturing service (EMS) provider that is always upping the ante, with a successful turnaround in operations in 4Q16.”
The improved performance were due to lower wastage and shorter-than- expected gestation periodfromnewproductramping, as well as higherthan- expected operational efficiency and more products output tocounter fixed overhead costs.