KUALA LUMPUR, AUG 8, 2024 – In a bourse filing today, contract manufacturer Ge-Shen Corporation Berhad (the “Group”) announced that its profit after tax and minority interests (“PATMI”) for the quarter jumped 104% year-on-year from RM 2.19 million to RM 4.47 million for the second quarter of FY24 (“Q2FY24”).
The rise in profitability was due to increased sales revenue from achieving a higher utilisation rate across its factories in Penang and Hanoi, Vietnam, cost optimisation efforts as well as the deconsolidation of loss-making subsidiary, Demand Options Sdn Bhd (“DOSB”).
During the quarter under review, the Group continued its strong performance from the previous quarter with revenue increasing by 25% from RM 60.10 mil a year ago to RM 75.13 mil in Q2FY24, the highest ever revenue recorded in a single quarter since the Group listed 20 years ago.
For the first six months of FY2024, the Group reported a PATMI of RM 7.54 mil, compared with a net profit of RM 435,000 in FY23 whereas its earnings per share (EPS) rose from 0.39 sen a year ago to 6.06 sen.
In comparison to the preceding quarter ended 31st March 2024, revenue rose slightly by 1.7% while net profit rose by 45.7% on the back of gains on deconsolidation of DOSB despite higher production costs in Q2FY24.
“The Group will continue to invest in our existing manufacturing facilities occupied by both Kibaru and Polyplas, expanding the production lines to increase the output capacity to cater to new clients,” said Louis Lau, the Chief Executive Officer of Ge-Shen Corporation Berhad commenting on the future prospects.
Despite the volatility in the currency market, the Board remains cautiously optimistic about the Group’s performance for the rest of the year, given its current acquisitions and growth plans. The Board also highlights that the risk could be mitigated because most of its raw materials are purchased in US dollars and other foreign currencies.
With the assertive investment strategy that was put in place last year, the Board envisages that it will be able to secure more customers in the EMS and medical devices sector which will reposition the company into a high-tech manufacturing business with a better margin.
The Group has embarked on inorganic growth to boost its technological capabilities in recent months via acquisitions. The Group is in the midst of acquiring a 40 percent stake in Local Assembly Sdn Bhd and a 60 percent stake each in Amity Research & Development Sdn Bhd and Amity Services & Consultancy Sdn Bhd. The acquisitions are expected to be completed by the second half of this year.
Shares of Ge-Shen rose by 2.7% to close at RM 3.82 on Thursday, resulting in a market capitalization of RM488.30 mil. Year to date, the counter has risen by 230%.