Homegrown precision manufacturing solutions provider Grand Venture Technology (GVT) has posted net profit of $7.1 million for the 1HFY2022 ended June, 16.2% down y-o-y.
Revenue increased by 25.3% y-o-y to $67.0 million due to higher sales across the group’s three segments, semiconductor, life sciences and electronics, aerospace, medical and others.
Revenue for the semiconductor segment increased on the back of an overall sustained demand for semiconductor chips and additional contribution from the group’s recent acquisitions.
Life sciences also reported revenue growth due to an increased production volume for existing mass spectrometers and its bolt-on products and expanded wallet share from new customers in the segment. The growth was offset by supply-chain-induced constraints by the customers due to Covid-19 restrictions in Shanghai, China.
Revenue from the electronics, aerospace, medical and others segment saw a surge following robust demand growth across all key customers in the segment and maiden contribution from the group’s recent acquisitions, including $3.2 million from the aerospace business.
Gross profit increased by 1.9% y-o-y to $18.1 million in line with the revenue increase, although gross profit margin (GPM) fell by 6.2 percentage points to 26.9% mainly due to lower margins recorded in the semiconductor, as well as the electronics, aerospace, medical and others segments.
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Other income surged by 168.9% y-o-y to $1.7 million mainly due to higher foreign exchange gain of $0.7 million arising from the strengthening of US Dollar against respective functional currencies of each entity. The higher other income was also due to higher amortisation of deferred income amounting to $0.1 million and $0.1 million higher rental and charges to tenants.
Other operating expenses also surged by 90.4% y-o-y to $2.3 million due to a $0.3 million increase in depreciation arising from the acquisition of non-production assets, a $0.3 million rise in the amortisation of customer relationships and order backlog in connection with J-Dragon and Formach and a $0.2 million increase in repair, maintenance and other expenses in conjunction with the expanded business volume.
Finance costs also rose by 36.3% y-o-y to $1.1 million mainly due to higher costs from the group’s utilisation of its credit facilities and higher operating lease interest expenses for the group’s expanded factory floor space.
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As at June 30, cash and cash equivalents stood at $27.6 million.
Earnings per share (EPS) for the period stood at 2.12 cents.
The group has declared an interim dividend of 0.3 cents per share, down 0.2 cents y-o-y, payable on Sept 9.
In its outlook statement, GVT says it expects to enjoy “robust demand” across all its business segments in the ensuing months, even as it is mindful that the headwinds faced by some of its back-end semiconductor customers may cap its growth in the near term.
It adds that its recent expansion into the front-end semiconductor business is a “timely move”.
“Engagement with prospective customers is progressing well and the onboarding of new customers for this business segment in due course should mitigate the softening demand situation from back-end semiconductor customers,” says the group in its Aug 10 statement.
“Demand from the life sciences segment should remain resilient given the typically long lifecycles of the customers’ products. Business activity is expected to remain healthy for the medical segment, and the group is tapping on acquisition synergies with J-Dragon to engage new customers,” it adds.
Amid the rising interest rates, GVT says it has locked in a lower, fixed interest rate for the financing of its Singapore facility in early 2022, which should have a positive impact on its borrowing cost.
Shares in GVT closed 1.5 cents lower or 2.11% down at 69.5 cents on Aug 10.
