Greatech Technology Bhd (GREATEC, 0208) — a big fish in a small pond
PENANG-based Greatech Technology Bhd may have a low profile among investors but it is involved in high-tech business activities and counts global multinational corporations (MNCs) as its clients.
The factory automation solutions provider currently has only four to five major customers across various industries, but they include Fortune 500 companies.
Among them are a US-based world leader in solar panels, an electric vehicle (EV) car battery manufacturer and a smartphone maker.
In the semiconductor segment, the group serves global integrated device manufacturers (IDMs), especially for sensors, loaders and unloaders.
An automation solutions provider, Greatech designs, develops and produces the system, machinery and equipment for its customers’ manufacturing processes. The group also provides value-added services including parts, training and after-sales support.
So brisk was business in the financial year ended Dec 31, 2019, that Greatech generated a net profit of RM52.3 million on revenue of RM215.94 million.
Its close of RM3.70 last Thursday values it at RM2.316 billion, making it the largest ACE Market-listed company on Bursa Malaysia.
In short, in terms of profitability and market capitalisation, Greatech is a big fish in a small pond. Focus Dynamics Group Bhd is a distant second on the ACE Market with a market capitalisation of RM1.441 billion.
In his first interview since Greatech made its debut on Bursa Malaysia last year, executive director and CEO Tan Eng Kee says the group has put in place a five-year master plan.
A key target is initiating a transfer to the Main Market. “Our group has grown rapidly and we are ready to bring it to the next level. It [the transfer] is in our pipeline. I urge investors to continue to place their confidence in us. They should grant us at least two to three years to see an upward performance trend. The best of Greatech is yet to come,” he tells The Edge in a phone interview.
Tan, who controls 71.7% of Greatech, describes working with Fortune 500 companies as a learning curve. “I believe that in order to penetrate the global market, tech companies must understand the dynamics of evolving markets and technologies.”
He believes that while manufacturing breakthroughs are important, the selection of markets and technologies is just as crucial. “When all these aspects are put into order, then we should no longer do business as usual. We need to be innovative to draw the right market with the right demand at the right time.”
Commenting on the company’s five-year master plan, Tan says many activities have been carried out since early this year. “Many of our talent development and marketing strategies are already in the pipeline. In terms of product development, we are concentrating on EV batteries and life science sectors at the moment,” he adds.
Greatech launched its initial public offering at 61 sen per share and has not looked back since its listing on June 13 last year.
Valued at RM463.24 million a year ago, its market capitalisation has jumped five-fold to RM2.316 billion.
Its closest rival, Pentamaster Corp Bhd, which is listed on the Main Market, has a slightly bigger market capitalisation of RM2.35 billion.
In marking Greatech’s one-year listing anniversary, Tan says he has learnt a lot over the past 12 months, and that this has given him better clarity about what he wants for the company.
“I’m happy that the company is slowly moving towards the vision that I have and, more importantly, we are on the right track in our development plans. Greatech is still a growth stock,” he says confidently.
Although it has been a player in the sector for over two decades — it began in 1997 — Tan says not many knew of the company until its IPO last year. “Since then, we have created a big name for ourselves in the market,” he says.
Pandemic, trade war create opportunities
Tan has big ambitions for Greatech and aims to make it one of the world’s leading automation players. “We are aggressively working on our products and market development, which will contribute to growth in the near future.”
He admits, however, that Greatech has experienced some disruption and logistical challenges in the supply chain due to the lockdown and mobility restrictions as a result of the Covid-19 outbreak.
Although the company’s employees returned to work on April 29, workforce restrictions during the Movement Control Order (MCO) period meant it had to operate at below full capacity and efficiency.
Fortunately, the impact has been manageable so far, Tan says, and Greatech is now working overtime to make up for lost capacity. “Moving forward, we do not anticipate significant supply chain disruption given the strong mitigation measures.”
He reveals that Greatech was planning to undertake a merger and acquisition exercise in the first quarter but this has been postponed to later this year because of the pandemic.
Greatech remains committed to expanding its business operations and has the cash flow to do so, Tan says. “We have a strong business presence in the US and, therefore, it is about time to set up offices there so that we can provide better service support to our existing clients and broaden our reach towards new clients.
“We are also looking into the possibility of strategic-fit companies to add value to Greatech. In fact, the pandemic outbreak gives us the advantage to explore more options now.”
The ongoing trade war between US and China should also benefit some Malaysian companies, including Greatech, Tan points out. “We foresee more business opportunities as some MNCs may shift their operations from China to other countries, including Malaysia, and invest in capital expenditure for their new facilities.”
“In terms of automation technology, I would say that Malaysia is the best in the Southeast Asia region. So far, we have secured two [new] clients because of factory relocation due to the trade war.”