Friday 01 Dec 2023
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This article first appeared in The Edge Malaysia Weekly on September 18, 2023 - September 24, 2023

WITH electric mobility gaining momentum, Kedah-based electronics manufacturing services (EMS) provider Aurelius Technologies Bhd (ATech) is jumping on the bandwagon and directing its expertise towards the electric vehicle (EV) business.

ATech executive director and group CEO Loh Hock Chiang says the group is making a foray into the EV space by investing in technological advancements.

He reveals that ATech is working closely with a global EV giant, which could potentially be one of its new clients, to incorporate some Internet of Things (IoT) features into the latter’s vehicles. He declined to disclose the name of the EV giant.

“The automotive industry has rigorous testing standards. Pilot projects are underway. They (the EV giant) will be visiting us again by the end of this month. Our plan is to produce modules for them to put into the motherboards of their cars. We expect to commence production for them, hopefully by year-end,” he tells The Edge in an interview.

Headquartered in Kulim Hi-Tech Park, ATech is an investment holding company whose subsidiary BCM Electronics Corp Sdn Bhd is principally an EMS firm focusing on industrial electronic products. In 2019, ­ATech expanded its activities into the manufacturing of semiconductor components in the form of multicomponent integrated circuit (IC) for IoT applications.

Loh points out that ATech’s goal is to make its EV clients’ vehicles smarter, with seamless connectivity through global system for mobile communications (GSM) and WiFi.

“When equipped with various sensors, cars could collect valuable street data. Our module gathers this information, which is then processed by artificial intelligence (AI) to make decisions like acceleration, deceleration or stopping the vehicle,” he explains.

Loh acknowledges that although ATech currently serves nine to 10 main customers, the group’s business presence in the auto segment remains relatively small.

“Securing the major EV maker as a client will definitely contribute significantly to our financials in the coming years,” he says.

Loh, 58, is a chartered accountant with the Chartered Accountants Australia and New Zealand. He held various positions — including chief financial officer (CFO) and deputy CEO — in Comintel Corp Bhd, where his last designation was executive director, before he left in January 2018. Subsequently, Loh assumed his current position as executive director of BCM in 2018. He was appointed as group CFO of ATech in March 2021.

Following the passing of ATech co-founder and former CEO Lee Chong Yeow in January 2022, Loh was made an interim CEO before assuming the role of group CEO in August last year.

Loh and the late Lee each have a direct stake of 7.75% in ATech. The duo also jointly hold an indirect stake of 39.41% in the company through Main Stream Holdings Sdn Bhd (20.05%) and Main Stream Ltd (19.36%).

Jamie Lee Hwe Ping — the daughter of Lee — currently sits on the board of ATech as non-executive director. Hwe Ping’s younger brother Jonathan Lee Ming Chian, who serves as her alternate director, is the administrator of their father’s estate.

Meanwhile, ATech executive director and CFO Tan Chong Hin is also a substantial shareholder with 6.17% equity interest via Pixel Advisers Pte Ltd.

ATech’s top 30 largest shareholders include AIA Bhd, Etiqa Life Insurance Bhd, AHAM Asset Management Bhd, PMB Shariah Growth Fund and Kenanga funds.

Communication modules specialist

While ATech declined to disclose who its major clients are, one name that popped up following a channel check is American telecommunications equipment giant Motorola Solutions Inc (MSI). In fact, BCM had last month held a 30th-anniversary event in Kulim to celebrate and acknowledge the company’s long-standing collaboration with MSI, which was its first customer.

Over the past three decades, BCM has partnered MSI in “delivering mission-critical public safety communication devices” to the latter’s global supply chain, according to BCM’s statement on Aug 24.

Upon its inception in 1993, operating from a small workshop in Prai, Penang, and undertaking pure assembly work, BCM has since evolved into a prominent EMS provider, now operating from its 260,000 sq ft plant in Kulim.

ATech, through BCM, has a strategic plan to expand into fifth generation (5G) communication modules with applications in IoT and auto components, marking its foray into the new auto sector.

“The auto sector is a new venture for us and we recognise its immense potential, but we are not in an uncharted territory. Essentially, we continue to produce communication and IoT products,” says Loh.

He adds that while engines used to be the focal point of a car, today the battery is the critical component of an EV. Thus, battery management systems and safety are more important than ever. “As vehicles become smarter, the automotive industry requires more electronics and communication products, presenting us with abundant opportunities.”

To cater for new demand from the auto sector, ATech plans to double its premise built-up space to 520,000 sq ft from 260,000 sq ft currently, in a two-phase expansion project at its newly-acquired 301,874 sq ft freehold industrial land located in Kulim Hi-Tech Park. The land was bought from MMC Corp Bhd for RM13.6 million.

The new facility is anticipated to become an auto hub for ATech, aligning with the group’s strategic plans to accelerate its focus on the manufacturing of auto components and to develop its outsourced semiconductor assembly and test (OSAT) business, while carrying out advanced electronics manufacturing.

ATech saw its net profit grow 69% to RM37.2 million in the financial year ended Jan 31, 2023 (FY2023), from RM22 million in the previous year. The group generated a quarterly net profit of RM8.1 million in the first quarter ended April 30, 2023.

Loh notes that most of ATech’s products are embedded in finished products, where they remain hidden from plain view, often unnoticed by many.

For instance, in certain auto applications, there is a hidden module that serves as the core of the system. This module provides connectivity and interfaces with the car, enabling users to control various functions.

“When you want to find your car’s location, it requires sending a request before receiving such data. All of this involves machine-to-machine connectivity,” he says.

Loh also cites the ability to command a car for preconditioning, allowing a driver to pre-heat or pre-cool the car’s cabin before starting the journey. “The system can calculate the temperature and start your car accordingly. Moving forward, we will be producing such modules and motherboards for autonomous driving systems. You may not see our products, but you will certainly experience their applications.”

ATech is also working on electrification for safety applications in its automotive and EV projects. “Given the concerns about battery fires in EVs, we aim to prevent such accidents by closely monitoring the electrification status of the vehicles. This would enable us to cut off power immediately if something goes wrong.

“We are currently building some of these products, which again, you won’t see from the end products,” says Loh.

Shares of ATech have risen 25% year to date to settle at RM2.48 last Wednesday, giving the company a market capitalisation of RM977.12 million. The counter is currently trading at a trailing 12 months price-earnings ratio (TTM PER) of 24 times.

In comparison, Penang-based PIE Industrial Bhd, another EMS outfit listed on the Main Market of Bursa Malaysia, is trading at a lower TTM PER of 16 times. PIE Industrial has a market capitalisation of RM1.1 billion.

In a July 3 report, Mercury Securities states that it likes ATech for its attractive expansion plans, customer portfolio diversification from a high-mix-low-volume to medium-mix-medium-volume business, and solid track record. The research house recommends a “hold” on ATech, with a target price of RM2.72, implying an upside potential of 9.7%. 


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