Financial Highlights

The following table sets out the financial highlights based on the company’s combined statements of profit or loss and other comprehensive income for the Financial Period Under Review and FPE 2023:

• The revenue increased from RM 56 million in FYE 2021 to RM 92 million in FYE 2023, reflecting the company is expanding its market share.
• The gross profit margin rose from 32.27% in FYE 2021 to 40.29% in FYE 2023, driven by increased orders from foreign customers denominated in foreign currencies, benefiting from the appreciation of SGD and USD against RM.
• The PAT margin increased from 6.52% in FYE 2021 to 13.20% in FYE 2023.
• The gearing ratio is 0.52 in FYE 2023, slightly above the healthy benchmark range of 0.25–0.5, indicating a relatively higher reliance on debt compared to equity.

Major customers and suppliers

Major Customers

The company’s top 5 major customers for FPE 2024 is as follows:

According to the revenue contribution from Wilmar group, the company is dependent on Wilmar group as a whole. However, this dependency is mitigated by dealings with various subsidiary and associate companies within Wilmar group which are managed and operated by different management teams. Each company within Wilmar group conducts its own independent assessment of the company’s products and purchasing decisions are made according to the needs of that particular company.

Major Suppliers

The company’s top 5 major suppliers for FPE 2024 is as follows:

The company is dependent on the Siemens group of companies for the fabrication and assembly of the SIVACON S8 LV switchboard and MCC panels. The company is also a certified Siemens System Integrator for Siemens’ products under the factory automation, process automation and digital connectivity and power categories.

Additionally, the company is dependent on the Emerson group of companies. The company is reliant on Emerson for the direct supply of certain products and software under their respective distributorship agreement with Emerson. The dependency on Emerson Group of companies is mainly from purchasing their PLC and software. However, if the company is unable to directly obtain supply from Emerson Group of companies, they have the option to purchase similar PLC and software from their authorised distributors or from alternative suppliers of different brands. As such, the company is not dependent on the distributorship agreements with Emerson Group of companies.

Meanwhile, the company is not dependent on the other remaining major suppliers as they contributed less than 10.00% of the company’s total purchases and the materials supplied are readily available from other suppliers.

Industry Overview

Industrial automation involves the use of process control systems that control machines, equipment, devices and instruments used in performing work, including, manufacturing, processing, extraction, and transportation of materials. Process control systems combine computing software, hardware, and communications technologies to receive data from sensors and instruments, process it, and transmit the data to other devices (for example to display information) or actuators to trigger actions. At the core of industrial automation, process control systems enable machinery to operate in an integrated, precise manner, executing processes with accurate timing and sequence. This enhances productivity, reduces manual intervention and human error, improves output quality, and minimizes workers' exposure to hazardous conditions.

Power distribution systems are designed to receive external electricity and safely distribute it in a controlled manner to various internal locations and user equipment, while providing protection against unwanted power surges or overcurrent. These systems include components such as switchgears, switchboards, distribution boards, and motor control centers. In Malaysia, the power systems industry is governed by the Electricity Regulations 1994, which require entities performing electrical work to register with the Energy Commission of Malaysia as electrical contractors. Manufacturers of switchboards also required to register as switchboard manufacturers.

Power distribution in hazardous or explosive environments requires specialized Ex equipment designed to mitigate the risk of ignition and ensure the safety of personnel and assets. Ex equipment incorporates protection techniques to address the risks associated with potentially hazardous or explosive environments, including flammable liquids, vapours, gases, or combustible dust and fibres. These conditions, likely to create explosive atmospheres, and are commonly found in industrial and commercial settings auch as offshore oil and gas (O&G) rigs, platforms and refineries, petrochemical and chemical processing plants, and pharmaceutical manufacturing plants.

In the O&G industry, Ex switchracks are often used on offshore platforms and drilling rigs. These distribution panels consist of enclosures containing busbar, controllers, circuit breakers, motor starters, or some other electrical components mounted on a freestanding metal structure specially fabricated to be Ex compliance. They provide protection against harsh environmental conditions such as salt spray, dust, and extreme temperatures, while optimizing limited space. The use of Ex enclosures for individual equipment ensures adherence to strict safety requirements. Additionally, Ex switchracks can integrate with Ex solar PV systems, providing reliable off-grid power and supporting the industry's transition to sustainable energy solutions.

According to the research from Vital Factor Consulting, between 2021 and 2023, the sales value of electricity distribution and control apparatus grew at a CAGR of 30.6%. Similarly, the sales value of switchboards grew at a CAGR of 33.1% during the same period. In 9M2024, the sales value of electricity distribution and control apparatus grew by 1.2% to RM10.5billion.

The key drivers in this industry:

• Global trend of the Fourth Industrial Revolution (Industry 4.0)
• Continuous growth and rising investments in the oil and gas (O&G) industry
• Global shift towards sustainable and renewable energy sources

Future plans and strategies for SWIFT ENERGY TECHNOLOGY BERHAD

The company’s business strategies and future plans are set out below:

1. Expansion of fabrication facility, storage, office and new R&D centre
2. Expansion of operations in Indonesia
3. Purchase of new machineries, equipment and software
4. Setting up a dedicated R&D centre

MQ Trader View

Opportunities

1. The company has an IECEx and ATEX certified manufacturer for Ex solar PV panels or modules, and some other electrical equipment
2. The company has an approved partner for Siemens’ LV switchboard products and industrial automation hardware and software, and an Authorised Distributor for a range of power and industrial electrical products

Risk

1. The company is dependent on the performance of the O&G industry, and grain products, edible oils and food manufacturing industries
2. The company is dependent on Siemens group and Emerson group as their major suppliers
3. The company is subject to foreign exchange fluctuation risks which may impact the profitability of the Group

Click here to continue the IPO - Swift Energy Technology Berhad (Part 1)

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