Founder & Executive Chairman’s Message Print E-mail

It is with much humility that I would like to begin my report with my sincerest and heartfelt appreciation to all the staff and employees of Globetronics Technology Bhd. (“GTB”) for their intense focus and unmatchable devotion, striving selflessly in order for our Group to sail through another treacherous year in FY2021. While it is undeniable that FY2021 was even more challenging than FY2020 particularly due to another yearlong border closures, sporadic lockdowns, supply chain interruptions and the likes, our Group stood tall throughout the last 2 years of epic trauma caused by the energy sapping, yearlong Covid-19 pandemic related challenges and interruptions posed to us throughout FY2021. 

Our Group of highly motivated workforce under the meticulous and outstanding stewardship of CEO (Dato’ Heng), CFO (Ng Kok Choon) and COO (Heng Charng Yee) took the bull by the horns, converting many crises into gainful opportunities while delivering a reasonable bottom line result in spite of the softer revenue for the year due mainly to the Covid-19 pandemic related business interruptions and the phased-exit of some matured, zero-margin product-lines in our Kuala Lumpur (“KL”) factory.

Compared to our Group’s FY2020 financial results, FY2021’s profit-after-tax (“PAT”) of RM52.9 million improved by 4% whilst the revenue softened by 9% at RM206 million. It is noteworthy that a line-up of four new projects / businesses had been actively worked on in FY2021 and are ready to start contributing towards the second half of FY2022 together with another two new businesses ready for contribution in early FY2023. On top of that, our Group continued to deliver strong dividend payout of RM50.2 million to our shareholders while closing FY2021 with a healthy RM195.1 million in cash and bank balances. However, due to various Covid-19 pandemic related business interruptions which impeded the Group’s FY2021 financial growth, GTB’s market capitalization closed FY2021 lower at approximately RM1.1 billion versus RM1.8 billion at the end of FY2020.

Notwithstanding the multiple challenges posed to our Group in the full compliances to all Covid-19 pandemic related standard operating procedures (“SOPs”) leading to human-resource shortages, prolonged border closures, material supply chain disruptions as well as restricted overseas-travels, our Group’s Sensors Division continued to deliver 100% delivery-commitment to our customer’s products and service-demands while successfully qualified three new projects ready to go into mass production in FY 2022/23 timeframe. Our quartz crystal timing devices Division on the other hand faced severe price competition as well as technology replacement, which made us decide to exit the legacy product-lines while consolidating other businesses into our Penang operations to reduce overhead costs. As for our Group’s LED / laser / optical devices’ Division, improved product-loadings from certain key customers coupled with tight operational cost-controls translated into a year with strong growth in both revenue and PAT compared to FY2020’s financial results. 

On the governance front, our Group continued its work towards proactive compliances to a host of revamped statutory, regulatory and reporting requirements in the Malaysian Corporate scene. The key activities include the completion of risk assessment studies and analysis of ‘adequate procedures’ set out in the Ministerial Guidelines on Adequate Procedures issued pursuant to Section 17(A) of Malaysian Anti-corruption Commission 2009 (Amendment 2018) (“MACC”) Act to enhance the overall transparency of GTB Group as well as the revamping of Group’s Sustainability / Environmental, Social, Governance (“ESG”) initiatives as follow:

Sustainability and ESG Initiatives

Major revamping of GTB Group’s Sustainability and ESG initiatives were instituted in FY2021 with quarterly review sessions being conducted for GTB Board of Directors as well as for the ARMC whilst monthly review sessions are being conducted for all top executive and management teams together with all relevant ESG-team leaders.

Our Group also initiated dialogue and briefing sessions with Bursa Malaysia to understand our latest score and standing on Sustainability and ESG fronts.

A revamp of GTB Group’s Sustainability and ESG initiatives were instituted in FY2021 focusing on “Themes exposure for Globetronics”, where high exposure areas have been identified and focused on to improve our Group’s overall sustainability and ESG practices. Some of the identified action plans have been reinforced through the creation of new policies to emphasize and align the Group’s direction toward the relevant themes. We also continue to prioritize areas of relevant themes such as climate change, pollution and resources, environment supply chain, social supply chain, water security, health and safety and labour standard. This is demonstrated through the careful planning of our new building expansion which would incorporate the latest environmentally friendly materials and equipment that is projected to have energy avoidance and carbon footprint reduction through a more efficient use of the Group’s energy and water resources. 

On the Social portion, one of our key focuses was in ensuring that all our employees are fully vaccinated through our vaccination drive in conjunction with Program Imunisasi Industri COVID-19 Kerjasama Awam-Swasta (“PIKAS”) while all our workers accommodations that were audited by Labour Department (Jabatan Tenaga Kerja) had all been certified to be fully compliant to the Employee’s Minimum Standards of Housing and Amenities Act. On top of that, our efforts to continue upskilling our employees with expanded training budget and training hours per employee focussing on Digital Technology programs have come in handy in our drive towards Industrial Revolution 4.0 (“IR 4.0”) initiatives and readiness towards advanced manufacturing technologies in our industry. 

SustainabilityandESGInitiatives

Financials / Dividends

It is always my pleasure to announce to our shareholders that our Group continued to stay firm to our commitment of paying the best possible dividends to our loyal shareholders and it is no difference in FY2021, our Group paid out a heartwarming amount of RM50.2 million in dividends to shareholders which translates into almost 95% of the net profit for the year while maintaining a very strong cash-flow position with cash and bank balances standing at RM195.1 million (FY2020: RM163.7 
million).

Details of the dividend payments are as follows:

1. Year 2020’s third interim and special dividend of 3 sen per share amounting to RM 20.1 million on 25 March 2021;

2. Year 2021’s first interim and special dividend of 2 sen per share amounting to RM 13.4 million on 5 July 2021; and

3. Year 2021’s second interim and special dividend of 2.5 sen per share amounting to RM 16.7 million on 2 December 2021.

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Impending Changes in CEO and Boardroom

After having devoted 25 years of his most valuable and productive life into leading our Group and delivering endless outstanding contributions and transformational accomplishments to our Group together with a streak of stellar and unbroken profit-track record and breakthroughs, our beloved CEO Dato’ Heng Huck Lee has decided to seek retirement as GTB Group’s director right after this year’s upcoming 11 May 2022 Annual General Meeting (“AGM”) and will retire as GTB Group’s CEO on 30 June 2022. 

On behalf of our Board of Directors, management and staff, I would like to thank Dato’ Heng from the bottom of my heart for having devoted a quarter century of his most valuable and productive life into leading our Group with stellar accomplishments. Way beyond just being an outstanding CEO to our Group, Dato’ Heng has also become the soul of our organization as well as the most trusted and dedicated friend to each and everyone of us. Dato’ Heng besides being a highly admired and adored CEO in our industry and community, has also been my personal best friend and confidant throughout the last quarter century!! Once again on behalf of our Board of Directors, management and staff and all our stakeholders, I would like to place on record our heartfelt gratitude and appreciation to Dato’ Heng for all his 25 years’ of outstanding and glorious contributions to the GTB Group and we wish him the very best in his well-earned, well-deserved retirement. Thank you very much for everything, Dato’ Heng. 

By the same token, I would like to take this opportunity to convey our Group’s heartfelt gratitude and sincerest appreciation to Dato’ Syed Mohamad Bin Syed Murtaza (Dato’ Aidid) who after devoting 11 years as our Group’s Independent Non-Executive Director with the highest degree of professionalism and faithful services, will also be retiring from the GTB Board after the upcoming AGM on 11 May 2022. We shall miss Dato’ Aidid dearly and would like to wish him the very best in everything going forward!

Kudos to our Group’s proactive succession planning system, I take pleasure to report that our Group have ensured an impeccable top-executive-succession-plan years in advance. It is thus an opportune time for me to make an auspicious announcement that our current Group COO Ms Heng Charng Yee will succeed Dato’ Heng as GTB’s Executive Director on 12 May 2022 and as GTB’s Group CEO on 1 July 2022. Our heartfelt congratulations and warmest welcome-on-board are due here to Ms Heng Charng Yee!

At this juncture, it is incumbent upon me on behalf of GTB’s management, staff and stakeholders to take this opportunity to convey our heartfelt gratitude and sincere appreciation to each and everyone of our highly respected Board of Directors for their meticulous guidance, timely support and invaluable motivation provided to our teams and workforce throughout all these past years.

Last but not least, on behalf of GTB Group, I would like to thank each and every one of our shareholders and stakeholders for your unfailing encouragement and support to us over the past years. 

Thank you all very much!

Outlook and Projection for Year 2022

Since the beginning of Covid-19 pandemic in late 2019 which quickly engulfed the world with epic trauma since early 2020, not only has the pandemic caused sicknesses and deaths, it has been creating huge havoc in the technology and automotive industry. In the early phases of the pandemic, the work-from-home (“WFH”) decree caused the auto demand to plunge worldwide and automakers subsequently began to shut down plants which halted semiconductor orders from their suppliers while the WFH-trend started a surge in demand for cellphones, televisions, computers, games and home appliances and the likes. As a result, semiconductor suppliers switched their production capacity away from automotive devices to other electronics systems that were in higher demand. When the auto industry came back online in the latter half of FY2020, semiconductor suppliers who had shifted production capacity away from automotive applications, could not meet their renewed demand and a serious shortage ensued in the automotive industry. On top of that, Covid-19 pandemic continued to create major political divides in most industrialized countries which further led to material-supply-chain interruptions, thus tripling the effects of supply-shortages of sensors, optoelectronics, discrete semiconductors and actuators for the semiconductor, automotive and Internet-of-Things (“IoT”) arena.

Allied Market Research recently published a report that the global IoT-sensor industry was pegged at USD12.4 billion in year 2020 and is expected to reach USD141.8 billion by year 2030, growing at a compound annual growth rate (“CAGR”) of  28.1% from year 2021 to year 2030. Rise in use of sensors in IoT applications, surges in the use of IoT-sensors in automotive and industrial sectors and a high demand for connected and wearable devices have all boosted the growth of the global IoT sensors’ market. Increase in demand for IoT-sensors in the development of smart cities and the beneficial applications of smart sensors in automobiles, consumer electronics, healthcare sector would propel the growth of the global smart sensor market with new opportunities for the market players in the future. Increasing demand for energy-efficient and cost-effective devices and growing consumer interest in smart homes, smart devices and wearable electronics on top of the advancements made in the autonomous-electric-vehicles sector would further benefit the global smart sensor market going forward.

With focus of our business portfolio on a wide range of sensors, LED, laser and optical devices together with other emerging technologies in the pipeline, demand would continue to be filled by the continual adoption of IoTs, process-home-factory automation, electric vehicles, gaming and smart devices with new applications. The movement toward integrating the multifacets of these new technologies into a new medium called the Metaverse would require the acceleration of 5G and maybe even 6G technology in assisted applications like smart health-care networks through an amalgamation of IoT-devices that require improved network performance and enhanced cellular coverage coupled with all the previously mentioned applications. All these will result in astronomical demand for components that we are currently manufacturing and will potentially manufacture in the near future.

The Asia-Pacific region is anticipated to emerge as the highest contributor in the global smart sensor market to be followed by North America and Europe due to the growing smart cities and rising demand for self-diagnosis, energy conservation, wireless technology across various sectors including automotive, consumer electronics and healthcare.

Closer to home, as a result of the prolonged US-China trade war and the U.S. now offering incentives for big US and EU multinational corporations in repatriating their manufacturing capacities out of China back to their homeland, we have recently noticed a surge of enquiries for potential relocation of manufacturing activities especially out of China to Malaysia. We are hopeful that all these enquiries will translate into new growth drivers for us in the coming years.

However, we may be faced with another uncertainty in the global economy recovery due to the Russia-Ukraine conflict. When Russia invaded Ukraine roughly a month ago, it was considered an isolated, regional infraction. It has since exploded into a global confrontation of sorts which has affected the global economy via three main channels, i.e. financial sanctions, commodities prices and supply chain interruptions. The global technology industry has similarly been hit hard as economic uncertainties dragged the technology-market sentiment down the slippery slope where it is no difference here in Asia and Malaysia. As of this writing there is still no clarity as to where the Russia Ukraine war was heading. As far as our Group is concerned, we are much more resilient now after overcoming two full years’ of Covid-19 related interruptions and volatilities and are thus more ready now to tackle similar challenges by closely monitoring the situation with our customers, business circles and relevant governmental agencies to stay proactive at all times. We shall remain agile in navigating the evolving environment and remain committed to our core businesses.

With the dwindling effects of Covid-19 pandemic on our Group’s business operations now that almost 100% of our employees are fully vaccinated (and 97% vaccinated with booster shots as of 10 March 2022) together with the expected recovery of the supply chain globally in the next one to two years, pending unforeseeable uncertainty from the Russia- Ukraine conflict, our Group will continue to focus on escalating up the value chain and riding on the research and development initiatives in new products design and development with our key customers moving forward. While the Group’s financial performance is expected to be satisfactory for year 2022, we are optimistic of our new growth opportunities with stronger financial performances for our Group in FY2023 and beyond.