KUALA LUMPUR (Aug 9): Shares of ATA IMS Bhd (KL:ATAIMS) rose on Friday in highly active trade and are on course for their best day in nearly two months, following the electronic manufacturing services firm’s plan to venture into the household appliance business.

ATA IMS rose as much as six sen or 16% to 44.5 sen. The stock was trading at 43.5 sen at 9.20am, still up 13%, as it looks set for the biggest single-day gain since June 20. At the last price, the company has a market capitalisation of RM523 million.

More than 14.67 million shares have changed hands so far, making ATA IMS the third most active stock on Bursa Malaysia.

The stock is not covered by institutional analysts.

Shares of ATA IMS have climbed some 46% so far this year, tracking gains of some of its larger peers in the same business amid optimism of growth in sales of consumer electronics. Investors also appeared to be betting that the new venture would help breath new lease of life into the company after nine consecutive quarters of losses.

The company has been in the red since its contracts with British home appliance maker Dyson were terminated in June 2022 over allegations of forced labour at its factories. Dyson, known for its vacuum cleaners and hair dryers, was ATA IMS’ largest customer at that time.

In the most recent quarter ended March 31, 2024, ATA IMS narrowed its net loss to RM63.57 million from RM88.82 million over the same period a year earlier. The company has until this month end to report its April-June results.

On Thursday, the company announced that it is forming a joint venture with Shanghai-listed Jinhua Chunguang Technology Co Ltd (Chunguang) to venture into the household and electrical appliances sector.

ATA IMS will hold a 49% stake in the joint venture via an investment of RM4.9 million, while Chunguang, which specialises in cleaning electrical hoses and accessories, will hold the remaining 51% stake worth RM5.1 million.

Many customers are shifting their manufacturing bases to Southeast Asia due to geopolitical reasons, and the joint venture will allow them to capitalise on trade diversion opportunities, ATA IMS said in the exchange filing.

ATA IMS’ top shareholders have also largely maintained their share in the company so far this year. The largest is Datuk Seri Foo Chee Juan, who holds a direct 0.11% stake and an indirect 33.97% through Oregon Technology Sdn Bhd.

Other significant shareholders include Datuk Fong Chiu Wan with a direct 26.28% stake and Datuk Balachandran Govindasamy with a direct 0.82% stake and an indirect 7.15% through PP Tech Ltd.