ViTrox eyes M&As, targets RM500m market cap

ViTrox eyes M&As, targets RM500m market cap
Business & Markets 2013
Written by Shalini Kumar of theedgemalaysia.com
Monday, 22 July 2013 10:01

KUALA LUMPUR: Penang-based TECHNOLOGY [] outfit ViTrox Corp Bhd plans to grow via mergers and acquisitions (M&A) to triple its market capitalisation to RM500 million by 2015, wrote iCapital.biz in a recent report.

Elaborating, CEO Chu Jenn Weng said in an email to The Edge Financial Daily the management is “open to any M&A in the near future that will be able to bring ViTrox to new heights in revenue and profitability in the medium to long term”.

In its latest annual report, Vi-Trox chairman Datuk Sri Kiew Kwong Sen said the company is eyeing double digit growth this year, driven by continuous improvements in new technologies and demand for its products.

“At the same time, we will focus on undertaking prudent cost control measures in order to maximise productivity and profitability”, he said.

For the first quarter ended March 31 (1QFY13), ViTrox reversed its losses from a year before with a net profit of RM458,000. Revenue almost doubled to RM12.9 million, from RM8.6 million in the previous corresponding quarter. The increased turnover was mainly due to its larger and diversified customer base driving up sales for certain products.

For FY12, ViTrox reported a net profit of RM20.47 million on revenue of RM88.85 million. For FY11, net profit and revenue stood at RM22.23 million and RM79.2 million respectively.

ViTrox is primarily involved in the manufacture and development of automated 2D and 3D vision inspection systems, which are installed on the production lines of printed circuit boards (PCB).

The company has two divisions, automated x-ray inspection (AXI) and automated optical inspection (AOI) systems, which contribute about 60% to the group’s revenue.

In terms of new technology, ViTrox is developing a 3D product under its AOI division, called “phase shift topology”, which is capable of performing 3D measurements of critical dimensions of solder paste and components, using patent pending profilometry technology.

In a typical AOI system, a camera moves to take various snap-shots of a PCB. The images will then be compared with a golden image which is similar to a blueprint, to ensure quality.

However, most companies only have 2D or 2.5D systems. A 3D imaging system would be able to reveal more errors on the circuit board.

“This new product will further enhance our leadership in providing superior 2D and 3D inspection capabilities for PCB assemblies. In the mid-term, the product should be able to help ViTrox improve on revenue and profitability as it offers higher value to customers,” said Chu.

Faster PCB checks have become a necessity following the increase in sales of smart phones and tablets.

For 1QFY13, ViTrox’s AOI division contributed about RM3.5 million to the group’s revenue, a 187% increase year-on-year.

The company is also developing a mini version of its AXI system. Traditional AXI systems function in a similar way to AOI, but use x-rays as its source, instead of visible light to automatically inspect features.

However, with PCB becoming smaller and having a shorter life cycle, using the mini AXI system to detect errors is substantially cheaper.

The targeted market for the mini AXI system will be PCB suppliers and testers to smartphones and tablet manufacturers. It is expected to be launched by the third quarter of the year.

iCapital.biz said it saw a lot of growth potential in ViTrox, but with industry trend moving towards getting products from a single supplier, ViTrox is currently being left behind.

“A substantial change in its internal research and development activity to innovate, or potential acquisitions with talents or acquisitions with new product offerings to complement its existing portfolio, are the only ways for ViTrox to grow in the longer term,” it said.

In its June 20 report, iCapital.biz recommended a buy for ViTrox at below 74 sen for the longer term. The stock closed at 77 sen last Friday.



This article first appeared in The Edge Financial Daily, on July 22, 2013.