This article first appeared in The Edge Malaysia Weekly on January 19, 2026 - January 25, 2026

AFTER a challenging 2025 marked by losses at its automotive division, unfavourable foreign exchange (forex) movements and rising labour costs, Kedah-based wire and cable manufacturer Supercomnet Technologies Bhd (KL:SCOMNET) is positioning itself for a comeback this year, driven by new products in the higher-margin medical segment.

Group managing director Kevin Hsueh Chih-Yu (picture) says earnings for the financial year ended Dec 31, 2025 (FY2025) are expected to come in below FY2024 levels, weighed down primarily by the industrial and automotive segments. Bloomberg-compiled analyst estimates point to a full-year 2025 net profit of RM27.1 million, lower than RM31.09 million in FY2024 and RM29.05 million in FY2023.

For the nine months ended Sept 30, 2025 (9MFY2025), Scomnet reported a 3.1% decline in net profit to RM21.29 million, while revenue slipped 2% year on year (y-o-y) to RM109.47 million.

While Scomnet’s strategic pivot towards the medical segment over the past eight years has delivered stronger margins and earnings resilience, performance has increasingly been offset by weaker contributions from its industrial and automotive businesses.

In 2018, Scomnet completed the acquisition of the remaining 80% stake in Supercomal Medical Products Sdn Bhd (SMP), making it a wholly owned subsidiary. SMP specialises in the manufacture of cables and devices for the medical sector and has since become the group’s core growth engine.

According to Hsueh, the automotive division has been operating at a loss for the past two years, weighed down by customer concentration and soft end-market demand. The business currently relies on a single customer, Stellantis NV, the principal of Peugeot.

“The segment has been adversely affected by weaker sales of Peugeot vehicles. The group supplies wire harnesses and fuel tanks for three to four Peugeot models,” he tells The Edge.

To reduce concentration risk, Scomnet is actively diversifying its automotive customer base. The group recently cleared an audit by a French Tier-1 automotive parts supplier that serves brands such as Maserati and Tesla, primarily for the European and US markets.

“We are a Tier-2 supplier, and we passed the audit in September or October last year,” Hsueh notes. While the potential contract is sizeable, he adds that it will be awarded on a project-by-project basis rather than as a single blanket agreement.

The industrial segment has also seen revenue decline, largely due to its lower margin profile. As a result, Scomnet is shifting its focus away from external customers and towards supporting internal demand from its medical and automotive operations.

Compounding operational pressures were adverse forex movements, particularly the strengthening of the ringgit against the US dollar, which further impacted its FY2025 performance. Scomnet has meaningful exposure to currency risk, as both sales and purchases are largely denominated in US dollars. The ringgit appreciated 10.3% against the greenback in 2025, ending the year at RM4.06 compared with RM4.472 at the close of 2024.

Labour costs also emerged as a key headwind. The increase in Malaysia’s minimum wage from RM1,500 to RM1,700 in February 2025 added an estimated RM2.5 million to operating costs, further squeezing margins. Scomnet employs nearly 800 workers, with labour expenses accounting for 20% of total group costs. Raw materials represent the largest cost component, making up 63% of overall costs.

Despite near-term pressures, Scomnet believes the current slowdown is more of a blip. The group expects growth to regain momentum in the new financial year (FY2026), supported by new product launches and steady organic expansion across its core medical offerings, including electrocardiogram (ECG) cables and endoscopy video cables.

Based on the average estimates of four analysts polled by Bloomberg, Scomnet is projected to post a net profit of RM31.85 million in FY2026, rising marginally to RM32.05 million in FY2027. Revenue is forecast to reach RM173.75 million in FY2026 and RM182.33 million in FY2027. Revenue rose 8.5% y-o-y to RM149.87 million in FY2024, compared with RM138.12 million in FY2023.

The medical segment is expected to remain the group’s primary growth engine.

“For the medical business, the outlook is favourable. Since December 2024, the group has rolled out AI-enabled smart cables, with monthly output doubling to around 600 sets from 300 previously,” says Hsueh.

The group is also preparing to introduce electroencephalogram (EEG) cables this year, developed jointly with a customer. The new product marks Scomnet’s first foray into brain activity monitoring.

In addition, Scomnet has been developing a mini drill device used to secure orthopaedic plates for bone fracture repair, in collaboration with a customer over the past three to four years. While the project remains at an early stage, the group has supplied 960 sets for final testing, training and marketing in the third quarter of 2025. “This represents a new customer, and we expect to begin mass production this year,” Hsueh says.

In 9MFY2025, the medical segment contributed 81% of total revenue, while the automotive segment accounted for just 2%.  Although the automotive business has shrunk in recent years, the group has not abandoned the segment.

“While its contribution to overall revenue has declined, we still believe the automotive segment has the potential to become a meaningful contributor to revenue and earnings. We have just passed the audit for a second customer, and we will see whether we can turn the business around before reviewing it again,” Hsueh says.

The automotive division recorded losses of about RM2 million per year in FY2024 and FY2025, reversing earlier profitability achieved in FY2022 and FY2023.

In October 2024, Scomnet acquired a 13.76% stake in Chiyitech Technology Co Ltd, a privately held Taiwanese company specialising in camera lenses for endoscopy and image processing boards, for RM6.9 million. Chiyi­tech has since established a new subsidiary in Sungai Petani, Kedah, with production expected to commence early this year.

The investment underscores Scomnet’s ambition to move up the value chain into end-to-end medical device manufacturing, strengthening its position as a more integrated and sustainable “all-in-one” manufacturer.

“Our cooperation is not just a financial investment. It is about strategy and synergy. They focus on lenses, while we specialise in microscopy tubing and cables. Together, this already forms the foundation of a complete device. For now, it is a collaboration. But in the future, we aim to develop more comprehensive medical devices jointly,” says Hsueh.

As at end-September 2025, Scomnet’s cash balance stood at RM242.05 million, up from RM233.59 million a year earlier, with no borrowings. The strong balance sheet provides the group with considerable flexibility to pursue mergers and acquisitions (M&A).

“We are open to M&A, but finding the right target, especially a profitable medical company, is not easy,” Hsueh says.

“We are also open to companies that may not be in the medical space today but have the potential to pivot into it. That is something we are willing to work on.”

He adds that geography is not a constraint. “Even when we invest in overseas companies, such as in Taiwan, the ultimate goal is to establish subsidiaries in Malaysia. This makes operations easier to manage and monitor.”

In December 2025, Scomnet acquired an industrial property in Sungai Petani for RM14 million through its 49%-owned Supercomnet Assets Sdn Bhd. Currently leased to an existing tenant, the facility will be repurposed to support its expanding medical manufacturing operations upon lease expiry in two years.

The group is working on acquiring a nearby parcel of industrial land for RM7.1 million, pending government approval. “We will continue to explore suitable business and investment opportunities, leveraging our available cash resources,” says Hsueh.

At present, capacity utilisation in the medical segment stands at 70% to 90%, while utilisation in the industrial and automotive segments is about 50% and 5% respectively.

Although the group does not have a formal dividend payout policy, it has maintained a track record of paying more than 50% of the group’s net profit. “Looking ahead, the payout ratio could potentially increase to 65% to 70%, compared with around 50%,” says Hsueh.

In FY2023, Scomnet declared dividends of two sen per share, RM16.8 million in total, implying a 58% payout. This was followed by another two sen per share, or RM17.2 million dividend, in FY2024, representing a 55% payout. For FY2025, the group has thus far declared an interim dividend of 1.1 sen per share.

Scomnet is now firmly under second-generation leadership. Hsueh, 53, is the son of James Shiue Jong-Zone, the group’s senior executive director, and Wu Huei-Chung, an executive director. The Shiue family remains the largest shareholder, holding a 53.82% stake as at Nov 12, 2025. This is followed by the Employees Provident Fund with 8.44%.

“The group is now on a stable financial footing. Over the medium to long term, it should continue to progress well,” says Hsueh.

Financial stability has become a competitive advantage, particularly in the medical segment, where customers value long-term reliability.

That financial strength also allowed Scomnet to buffer customers from supply disruptions. “Because of long lead times and logistics issues, we extended inventory coverage. For critical components like printed circuit boards, we keep up to two years of stock. Without strong cash flow, this would not have been possible, and customers appreciate that reliability. When you help them during difficult times, they stay with you.”

Scomnet has supplied major global medical device manufacturers such as New York Stock Exchange-listed Edwards Lifesciences Corp and Denmark-based Ambu A/S for the past 16 years. Together, these two customers account for about 75% of total revenue.

Of the four analysts covering Scomnet, three have a “buy” rating and one a “hold”, with an average target price of 92 sen apiece, implying a 26% upside from last Thursday’s close of 73 sen. Scomnet’s shares have fallen 45% the past year, giving it a market capitalisation of RM625.1 million. 

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