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 A comparison of 3 M'sian Gem Featured In Forbes Asia's 200 Best

  ELSOFT VITROX PENTA
What Do They Do?  - “Elsoft stands for ‘electronics’ and ‘software’”, and that they’re “involved in doing the research, design and manufacture of automated test equipment (ATE) and burn-in systems for the LED and optoelectronics industry.”

 -  Their customers are LED manufacturers who supply high-performance LEDs for application in smart devices, the automotive and general lighting industries.

 - Our second product division is in fact embedded controllers, which is actually one of the key initiatives by MDEC. We design the electronics controller board with embedded firmware, which is actually a micro-code intelligent firmware, so they can carry out the function. The application of that embedded controller is for medical devices like peritonial dialysis machines.
 - The company’s main business lies in automation, and that they have 2 sectors.
(1) ATE which is all the test equipment for semiconductors IC (integrated circuit), auto electronics, smart devices, IoT, 3D sensors.”
(2) Factory Automation System that’s more towards Industry 4.0. This is where factories want to replace manual labour with automation using robots

 - Almost-30 years of automation experience, their “put-out is mainly 80% exports to all the multinational corporations.

The company serves customers in sectors ranging from “semiconductor, computer, electrical and electronics, pharmaceutical, medical devices, automotive, food and beverage, consumer goods to general manufacturing.”
 - It  is a machine vision solutions provider that designs automated vision inspection equipment and systems “ranging from back-end semiconductor, PCBA SMT (printed circuit board assembly using surface-mount technology), to final assembly inspection, and integrated with Industry 4.0 smart solutions and system-on-ship embedded electronic solutions

 - It currently export approximately 74% of goods and services to more than 24 countries.

 - ViTrox maintains a balanced composition of customers from a wide diversified end market such as telecommunication infrastructure, automotive, medical devices, aerospace, computing, and mobile devices
What’s Next?  - one of our plans is to slightly diversify from our current business. With our core competency of electronics and software capability, we can actually venture into embedded controllers for medical devices

 - Of course the one that we are already good at doing, we will also put in a lot of effort into it this year because there are lots of new products, like in the automotive market we have LED headlamp testers
 - double-digit growth every year  - We will continue to stay focused on R&D, market expansion and talent development” to help industries “achieve zero defects and optimised productivity in their manufacturing.

 - We hope to grow beyond USD1B market cap in the next 5 years
In The Next 2 Years  -  Tan foresees a pickup in demand for 5G components for phones and thus an increase in the demand for the equipment needed to test those phones, too. This would mean “a lot of business for the whole industry”, “so we actually see the next 2 years we are going for better times.”

 - Another sector he foresees will increase demand for electronics would be the autonomous cars sector, and Elsoft would potentially benefit from that as well since they make test equipment for electronics and sensors.
 -  US-China trade war as an opportunity for growth.  “Now we see more enquiries, more interest coming from Chinese companies to buy from Malaysia” and “the same goes for US, we see more demand and enquiries from them, too.”

 - “we will try to capitalise on this trade war,” he said, calling it “trade diversion”.
 - We are extremely excited about the 5G, AI and Industry 4.0 development, in which these developments will transform the entire world towards a digital economy

 - We believe many of our customers, primarily the OSAT (Outsourced Assembly and Test) and EMS (Electronics Manufacturing Services) in the semiconductor and electronics assembly industries will benefit from these megatrends.
FY2018       
Revenue ('000) 78,150 394,684 422,201
Profit ('000) 39,917 105,484 57,116
Profit Margin (%) 51.08% 26.73% 13.53%
       
Future Result Projection (Estimation) for Year 2020 / 2021  
Revenue ('000) 80,000                               568,345                               659,690
Assumption (Growth Resume and back to FY18 Level from 5G trend) 20% growth in 2019 & 2020 25% growth in 2019 & 2020
Profit Margin (%) 50.00% 25.00% 20.00%
Profit ('000)                                 40,000                               142,086                               131,938
       
Current Market Cap ('000)                               581,215                           3,188,361                           1,695,315
Forecast P/E 14.53 22.44 12.85
       
Future Market Cap (with P/E 20)    
Future Market Cap ('000)                               800,000                           2,841,725                           2,638,760
Future Stock Price                                      1.20                                      6.03                                      5.56
       
Future Market Cap (with P/E 25)    
Future Market Cap ('000)                           1,000,000                           3,552,156                           3,298,450
Future Stock Price                                      1.50                                      7.54                                      6.95
       
Future Market Cap (with P/E 30)    
Future Market Cap ('000)                           1,200,000                           4,262,588                           3,958,140
Future Stock Price                                      1.80                                      9.05                                      8.34
       


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