Headwind

 

Company Profile

The company was founded in 1984 as Magnecomp USA a disk-drive components company 

She acquired Mansfield a metal stamping business in 1997.

Magnecomp was listed in SGX in 1998.

Name was changed to Innotek in 2007.

Remaining 16.67% shares of Mansfield was acquired in 2008. 

In 2015, Innotek incorporated Anhui KM Technology a 49:51 JV with Konka Precision Mould Manufactory. 

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Portfolio

Business are categorised into Precision Components and Precision Machining serving the Automotive, Consumer Electronics and Office Automation segments. 

In 2018, 99% of business were in China and 1% in Thailand. 

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Business & Management

The company under-went a prolonged period of under-performance between 2011 and 2015. 

In Nov15, Lou Yiliang (Chairman of Konka Precision Mould Plastic) was appointed CEO of Mansfield. He was subsequently appointed as CEO of Innotek in Mar17 where the company was successfully turnaround with a stronger balance sheet (see Z-score).

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Financial History

Revenue from Precision Components declined from 2010. Some of the causes were shift of Japan Office Automation business from China to S.E.A. with U.S. - China trade war accelerating the process. 

Revenue bottomed in 2016 and have remained relatively flat. 

Gross & Net margin improved significantly from 2016. This was driven by Precision Machining business from new Taiwan customers initially and then meaningful entry to the automotive segment supplying car seat mould, stamping, display panel and heatsink plus one-off commercial display product in 2018. 

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Business Situation

Revenue in 1H19 fell almost 11% as the automotive industry is slowing and struggling with overcapacity. Consumer Electronics TV bezels business faces headwind as customers shift to plastics for TV less than 55". Office Automation appear to have found a firm footing with he new Mansfield Thailand plant picking up business from OA customers.

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Headwind

Business in the near term is likely to face substantial headwind with the important automotive segment slowing across the industry. This is compounded by the weak consumer electronics market as a result of trade war. Office Automation as mentioned, is expected to provide support.

Despite near term challenges, Innotek is now a stronger company under able management to help tide through this rough period.