KUALA LUMPUR (July 19): EG Industries Bhd (KL:EG) said it has secured a confirmed purchase order (PO) valued at US$117 million (RM545.67 million) for 5G photonics related products.

In a filing with Bursa Malaysia, the electronics manufacturing services (EMS) provider said its wholly owned subsidiary SMT Technologies Sdn Bhd on June 5 secured the PO from an unnamed existing key customer, only referred to in the filing as "Customer C".

"Customer C is a global industry leader with expertise in industry leading research and development and cutting-edge manufacturing for, among others, optical modules, wireless access broadband, carrier ethernet and edge computing," EG said.

The group added that the PO is expected to be fulfilled in tranches over the next 12 months.

EG also cautioned that the group may face several risk factors associated with the PO including, but not limited to, order deferment by Customer C and the timely availability of raw materials from suppliers.

"While [the] EG group actively works to mitigate these risks, it’s important to note that any changes in these factors could still have a material adverse effect on the business and operations of the EG group," it said.

For the nine-month period ended March 31, 2024 (9MFY2024), EG achieved a 16.6% growth on net profit to RM33.5 million, from RM28.75 million in the previous financial year's corresponding period, driven by improved margins from a favourable sales mix, reduced operational costs, and lower foreign exchange losses.

The higher net profit was achieved despite the group recording a 27.9% decline in 9MFY2024 revenue to RM797.32 million from RM1.11 billion previously, primarily due to softer demand in certain market segments, including consumer electronics.

Despite the lower revenue, the group remains optimistic about its growth prospects, on robust demand for optical and artificial intelligence modules essential for the expansion of 5G wireless networks.   

EG's share price has rallied 55% year to date. The stock, which is currently hovering around its record high of RM2.34, closed at RM2.30 at Friday's noon break, giving it market capitalisation of RM1.07 billion.