High revenue from mechanical assembly biz pushes SFP Tech’s 1Q net profit up 16.47%

KUALA LUMPUR (May 12): SFP Tech Holdings Bhd's net profit rose 16.47% to RM10.1 million for the first quarter ended March 31, 2023 (1QFY2023), from RM8.67 million a year ago, underpinned by higher revenue in its mechanical assembly segment. 

The group said quarterly revenue had climbed 93.4% to RM34.61 million from RM17.9 million in 1QFY2022, with the mechanical assembly segment accounting for approximately 74.45% of total revenue.

Revenue for the mechanical assembly segment has surged to RM25.77 million from RM1.65 million a year earlier, mainly driven by sales of assembled mechanical systems to new customers from both Malaysia and Hong Kong, the engineering supporting services provider said in a filing with Bursa Malaysia on Friday (May 12).

Despite its higher profit, the group’s earnings per share dropped to 1.26 sen from 1.46 sen due to the dilutive effects of the new issuance of 207.44 million shares for its initial public offering last year.

SFP Tech had its debut on the Ace Market of Bursa Malaysia in June 2022 and the company joined the billion ringgit club after its share price surged more than 480% in less than six months upon listing.

The group did not declare any dividends for the quarter under review.

In terms of prospects, SFP Tech said the global seasonal adjustment in the electrical and electronic industry is expected to have a softening impact on the group’s orders, predominantly for the computer numerical control (CNC) machining and sheet metal fabrication business segments. 

In 1QFY2023, the group's other segments, namely the CNC machining, sheet metal fabrication and automated equipment solutions segments, all saw a decline in revenue.

As part of the group’s business strategy, it will focus on the mechanical assembly segment, which it envisaged to further grow the segment with sporadic large project-based business opportunities.

Shares of SFP Tech slipped two sen or 0.82% to RM2.41 on Friday, valuing the group at RM1.93 billion. 

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