The electronics manufacturing services (EMS) sector in Malaysia has seen mixed performance in 2024 despite being part of the broader tech upcycle, with rising costs, inflation, and supply chain disruptions offsetting growth from increased global demand and outsourcing trends. Key EMS Performances Winners : SKP Resources Bhd (+76% YTD) V.S. Industry Bhd (+47% YTD) NationGate Holdings Bhd (+51% YTD) P.I.E. Industrial Bhd (+29% YTD) Strugglers : ATA IMS Bhd (-8% YTD) JHM Consolidation Bhd (-36% YTD) Growth Drivers and Challenges Diversification Opportunities : The China+1 and Taiwan+1 strategies have positioned Malaysian EMS players to gain market share. However, reliance on major customers, such as Dyson, continues to be a concern. Cost Pressures : High inflation and production costs have affected profit margins. Company Highlights SKP Resources : Recorded a 27% y-o-y net profit increase , benefiting from a recovery in consumer demand. V.S. Indust...
The electronics manufacturing services (EMS) sector in Malaysia has seen mixed performance in 2024 despite being part of the broader tech upcycle, with rising costs, inflation, and supply chain disruptions offsetting growth from increased global demand and outsourcing trends.
Key EMS Performances
Winners:
- SKP Resources Bhd (+76% YTD)
- V.S. Industry Bhd (+47% YTD)
- NationGate Holdings Bhd (+51% YTD)
- P.I.E. Industrial Bhd (+29% YTD)
Strugglers:
- ATA IMS Bhd (-8% YTD)
- JHM Consolidation Bhd (-36% YTD)
Growth Drivers and Challenges
- Diversification Opportunities: The China+1 and Taiwan+1 strategies have positioned Malaysian EMS players to gain market share. However, reliance on major customers, such as Dyson, continues to be a concern.
- Cost Pressures: High inflation and production costs have affected profit margins.
Company Highlights
- SKP Resources: Recorded a 27% y-o-y net profit increase, benefiting from a recovery in consumer demand.
- V.S. Industry: Projected to see stronger sales from new contracts in the second half of FY2025.
- NationGate Holdings: Posted a RM46.6 million net profit in Q3, driven by the data computing segment but heavily reliant on unrealized forex gains.
Industry Outlook
- Analysts remain positive on the EMS sector for 2025, citing potential recovery, favorable diversification trends, and structural tailwinds from supply chain relocations.
- Tech Growth Cycle: The second half of 2024 marked the start of an upcycle, with expectations for sustained momentum in 2025.
Investment Calls
- AmInvestment Bank Research is overweight on the technology sector, favoring companies with secure orders and long-term strategies.
- Top Picks:
- ViTrox Corp Bhd (TP: RM4.75)
- V.S. Industry (TP: RM1.45)
- Malaysian Pacific Industries Bhd (TP: RM33.10)
- Greatech Technology Bhd (TP: RM2.60)
Conclusion
While the EMS sector faces near-term headwinds, including inflation and supply chain challenges, its long-term prospects remain robust due to favorable structural trends, demand recovery, and Malaysia’s growing role in global supply chains. Investors are advised to adopt a selective approach, focusing on companies with strong earnings visibility and strategic growth plans.
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