1. Describe Grand Venture Technology’s (GVT) financial performance over the past few years. What strategies have been put in place to maintain or accelerate its growth trajectory?
GVT is a manufacturing solutions and service provider for industries such as semiconductor, analytical life sciences, electronics and others, with operations in Singapore; Penang, Malaysia; and Suzhou, China. The group serves some of the largest original equipment manufacturers (OEMs) by providing a range of engineering, assembly, testing and product lifecycle management services for the manufacture of complex precision machining and sheet metal components and modules.
GVT has enjoyed rapid growth over the past few years. With our products progressing from incubation stage to mass production, revenue in FY2019 more than doubled and net assets grew nearly 10x (excluding share issuances, net assets grew approximately 5x) since FY2016.
Our focus will continue to be on enlargement of our customer base in both existing and new markets, by leveraging on our capabilities and technological know-how; investment in our operational and engineering capabilities; and expansion via M&A, joint ventures and partnerships.
The above strategies have helped to mitigate against headwinds in FY2019 as US-China trade tensions intensified, which exerted downward pressures on our semiconductor segment. This was, however, offset by growth driven by our life sciences segment. The group recorded strong performance in 1H FY2020, which we expect to continue for the rest of FY2020.
2. How has GVT’s business profile and revenue streams evolved since listing to-date?
GVT’s revenue streams remain resilient amidst recent US-China trade tensions and the Covid-19 pandemic. Our core fundamentals and competencies have propelled us to higher growth in 1HFY2020 with the expansion of existing (e.g. life sciences) and new (e.g. medical) segments. Our efforts to acquire customers in new segments and achieve diversification are beginning to yield results and could further bolster the quality of our revenue and earnings. Whilst semiconductor will remain as the key driver of the group’s revenue, we aim to grow our other segments in the coming years.
3. GVT is adding factory capacity in the Penang facility. What is the status of this expansion in Malaysia?
The new factory is under renovation and will become operational during the fourth quarter of 2020 as planned. We believe that this acquisition is timely as we are seeing increased demand and volume at our Penang facility that serves the semiconductor segment.
4. As part of GVT’s digital transformation to a “smart factory”, it has leveraged Industrial 4.0 to improve business and operational efficiency. Tell us more.
We are running a high-mix, low-volume business. Hence, we believe that our precision manufacturing process could produce an infinite combination and permutation of parts, process and specifications. As our business continues to grow and expand, the capabilities behind managing and executing such complex manufacturing works will have to be enhanced too. Technology is our answer.
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Going forward, we expect Industrial 4.0 (i4.0) to form the fundamentals of our manufacturing processes. Automation, AI, robotics, virtual reality are tools to enable higher efficiency, accuracy and capabilities as we engage in more complex and advanced manufacturing works.
For instance, the ecosystem of i4.0 will enable real-time assessment of our machine’s efficiency and stock level, enabling our engineers to analyse, plan and make decisions based on data. This could reduce uncertainties and enhance operational efficiencies. Automation of mundane works such as changing of tools, loading of parts, manual recording of data will enable our workers to take on more high value-adding works. Such deployment of technology will improve our manufacturing processes, resulting in higher quality products.
Most importantly, we will be able to enhance customers’ satisfaction. Our team can access data on the fly and be able to respond to customers’ concerns and requests with a faster turnaround time.
5. What is the group’s current dividend policy? Will the group maintain this policy?
The group has not announced dividend payouts since IPO, as cash resources were reserved for business growth. Accordingly, such investments have now contributed to business expansions, leading to healthy cash flows generated from operations. The group, therefore, is reviewing our dividend policy and will announce any developments in a timely manner.
6. How has Covid-19 impacted your operations in Singapore, Malaysia and China? Our participation in the medical, life sciences and semiconductor supply chain makes us an essential services provider, hence we were permitted to continue operating despite lockdowns in Malaysia and Singapore. Our China operations, however, were shut but have since resumed operations.
Our i4.0 initiatives have been timely as we embark on group-wide digitalisation. Whilst travel between our countries of operations was not possible, our current infrastructure and digital capabilities have enabled seamless communication across our facilities. Under new operational norms, we have been successful in planning and coordinating production across our facilities.
7. What are the factors that are critical to GVT’s success?
We remain nimble, open-minded, forward-looking and are always challenging boundaries. We listen to and work intimately with our customers not only in the processes of design for manufacturing (DFM) and design for assembly (DFA) but also product life cycle management.
We are committed to enhancing our engineering and capabilities to cater to the needs of our customers. To cater to niche customers with specific needs, we provide manufacturing of advanced materials such as quartz, ceramics and plastics.
We also remain committed to our employees and very much focused on talent acquisition and retention.
8. What notable developments can shareholders expect from GVT in the coming year?
During 2020, we have obtained ISO13485:2016 certification, which recognises our ability to provide medical devices and related services that consistently meet customer and applicable regulatory requirements. This cemented our capabilities footprint and propelled expansions in the life sciences and medical segments.
We believe that contribution from these segments will expand in 2020 and 2021, while the semiconductor segment is also expected to grow concurrently.
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9. How does GVT ensure energy, waste and water efficiency at its facilities?
GVT adopts standard costing processes to track direct manufacturing costs. This includes energy and water consumption estimates at the individual machine level. With the deployment of i4.0, the efficiency of our machines are being optimised to ensure minimal wastage as well as energy and water consumption.
We are also exploring deploying solar energy at our facilities to supplement our level of energy consumption.
10. What is GVT’s value proposition to its shareholders and potential investors?
GVT is run by seasoned veterans in the industry. The management has a clear, practical and achievable business plan which is already evident in the group’s rapid and sustained growth since 2015. Our current growth is purely organic and we have yet to tap into potential synergies as we look to expand via M&As and partnerships in the near term.
Backed by strong corporate governance, the group deploys its resources in optimising return of investment for our shareholders. We believe our business model is future-proof as we focus on i4.0 initiatives and build capabilities in advanced precision manufacturing and advanced materials. At the same time, the group will continue to diversify revenue streams in semiconductor, life sciences, medical, electronic and others to cushion against cyclical and structural challenges