Yen Global transforming into IoT player

by **Cals** Sat 16 Jul 2016, 17:37

Saturday, 16 July 2016

Yen Global transforming into IoT player

BY TEE LIN SAY

Bursa filings have revealed that the buyer of the 20% block of shares in Yen Global Bhd on Thursday was Taiwan-based Gemtek Technology Co Ltd, confirmingStarBiz’s report yesterday.
This means that Taiwan-listed Gemtek, which had already bought a 10% stake in loss-making apparel maker Yen Global last month, is now the single largest shareholder of the company with a 30% stake. The entry of Gemtek also marks the beginning of Yen Global’s transformation into a player in the “Internet of Things” or IoT space.
On Thursday, a 20% block or 27.1 million shares of Yen Global was transacted at 50 sen a share, costing the buyer some RM13.5mil.
Gemtek’s earlier 10% stake was bought at 52 sen.

The market appears to be bullish on this development judging from Yen Global’s share price. The stock was up 7 sen or 10.77% to close at 72.5 sen yesterday. On a year to date basis, the stock is now up close to 70%.
So just what is Gemtek up to?
Yen Global’s executive chairman and major shareholder Goh Kok Beng said that he too was caught by surprise by Gemtek’s acquisition of the 20% block.
“They just called me today. We will meet up next week, and we’ll see how to grow the business. Hopefully they can bring us more business, and other positive synergies,” says Goh.
On a lighter note, he adds that shareholders must be happy.
“Well they add value to my shareholders.
“Now there is more activity in the company,” he says.
Goh’s shares are owned through the family vehicle Extreme Lifestyle Sdn Bhd, which has a 21.87% stake in Yen Global.
Gemtek already had a working relationship with Yen Global prior to the shareholding entry.
Subsequently in April, Atilze inked a partnership with Gemtek, which is a global wireless broadband player, to market the latter’s telecommunication products in the area of broadband, long-term evolution and IoT.
More recently, Atilze partnered with Malaysia Digital Economy Corp to build city-wide IoT sensor networks using the LoRa technology.
Now, putting two and two together, it is quite obvious that Gemtek has big plans for Yen Global. Judging by the controlling stake it now has, it is likely that Gemtek intends to make Yen Global its vehicle in Malaysia.
Gemtek is no small fry in the technology space.
Listed on the Taiwan Stock Exchange, Gemtek is the world-leading provider of Wireless Broadband solutions.
Its annual revenues are in the billions.
For its financial year ended Dec 31, 2015, Gemtek recorded relatively flat revenues of TWD17.53bil(RM2.17bil) from TWD17.64bil(RM2.18bil), although its net income jump ed 188.46% from TWD71.644mil(RM8.85mil) to TWD206.67mil(RM25.54mil).
While Gemtek could not be reached for comment, it is understood to be looking to build the IoT ecosystem which is now aggressively being deployed in Taiwan, in Malaysia.
In Taiwan, IoT and the LoRa technology are the next big things which are rapidly being executed by the big technology players.
The main players in this game are Asia Pacific Telecom, the Hon Hai Group and Gemtek.
Gemtek and Taipei City are teaming up to establish 12 ‘low power wide area (LoRa) hotspots and creating Asia’s first capital city Internet of Things (IoT) platform with LoRa.
Earlier this month, the Hon Hai Group and Asia Pacific Telecom announced that Taipei City, Hsinchu City, and Taoyuan City in Taiwan will set up 500 LoRa Hotspots.
In the third quarter, the network will be extended to be the first ‘LoRa IoT Network’ to cover all of Taiwan, and in the future it will bring about a new-generation 5G mobile network standard.
What is for certain is that big money is going into the LoRa and IoT segment in Taiwan.
Gemtek is a pioneer member of the LoRa Alliance, a market-leading Low-Power Wide-Area Network (LPWAN) technology, especially for IoT based on the LoRa technology. LoRa is an open standard for LPWANs, which are created to connect low-power devices such as sensors over a wide area at lower prices.
IoT has been touted as the next big digital revolution, connecting millions of objects using inexpensive microsensors and is expanding the online universe to ordinary pieces of the physical world such as thermostats, cars, door locks and even pet trackers.
Gemtek’s plans in Yen Global are now becoming more obvious.
Yen Global - a new animal altogether?
Gemtek’s entrance as a new substantial shareholder could this mean that Yen Global’s prospects are about to change.
Thus, investors who buy into Yen Global are no longer buying into an apparel company, but one which has exposure to the IoT business and the LoRa technology.
Yen Global’s earnings have been lacklustre to say the least.
Save for 2013, the company has been loss making over the last five years.
For the third quarter to April 30, 2016, net loss widened to RM5.31mil from a net loss of RM2.34mil previously.
Revenue was down 19.58% to RM6.16mil. For the nine month basis, net loss widened to RM9.22mil from a previous loss of RM8.63mil.
Revenue was down 28.46% to RM17.15mil.
Yen Global is a vertically integrated apparel manufacturer, wholesaler and retailer that also performs its own manufacturing, design and distribution.
Some of the brands it distributes include GA Blue, Mustang Jeans and Edwin.
Goh said that the apparel business would improve next year, as it already received an exemption for the import duty of its clothings.
“Prior to this, we were paying 25% for the import duty, and 10% for sales tax. Now, we only need to pay 6% for the Goods and Services Tax.

“This reduction in taxes should see some improvement in our earnings next year,” says Goh.