Petaling Jaya: Nationgate Holdings BhdThe acquisition of new customers and business alliances through joint ventures are expected to spearhead the Group's growth.
UOB Kay Hian (UOBKH) Research said these initiatives will drive growth beyond the company's core goals.
“Beyond launching from a low base in 2023, NationGate is spearheading growth through new customer acquisitions and business partnerships, which will require new facilities to accommodate these trade diversion-related opportunities. It may be necessary.
UOBKH Research said in a report yesterday: “This is a potential gain from the consumer electronics sector, semiconductor sector, assembly and test services, computing power infrastructure and server space through active collaboration with GoldTek Technology. I think there is,” he said.
The research agency noted that Nationgate recently acquired a 100% stake in Hesechan Industries Sdn Bhd, which has a land area of 272,900 square feet to supplement its expansion plans.
“If these prospects materialize, they could give way to the group's target of more than 30% growth in net profit from 2024 onwards.”
Additionally, UOBKH Research said NationGate has been appointed as an OEM manufacturer for artificial intelligence computing.
“Although the division's contribution to revenue is still modest, this development provides the group with a new platform to capitalize on the surge in demand for AI and trade transformation opportunities.
“On the other hand, there is significant potential for revenue growth if we deepen our involvement in advanced process manufacturing.”
On the corporate front, UOBKH Research said Nationgate is also proposing to transfer its listing from the ACE market to Bursa Malaysia's main market via an expedited transfer process by the Securities Commission Malaysia.
This is expected to be completed in the first half of 2024.
UOBKH Research says that since the US-China trade war began in 2019, Nationgate has benefited significantly from trade diversion, with three-year combined annual growth rates of revenue and core net income of 43% and 153%. He added that it was.
“This proportion has now increased from 55% to 70% of total revenue after the Group further expanded its electronics manufacturing services into the networking and communications sector. This was achieved by providing assembly and testing services .
“Following the start of new operations at Factory 7, the Group has expanded Factory 5 by a further 80,000 sq ft and added a new Factory 8 with an area of 248,000 sq ft, increasing the floor space by 53%.
“Several multinational companies have expressed interest in using this facility.”
UOBKH Research also said NationGate should benefit from supply chain reconfiguration of existing customers.
“The company will also take advantage of the new business partnership with GoldTek to further expand its business and strengthen the relationship of both parties towards partnering with more affiliates and/or subsidiaries of Hong Hai Precision Industry in the future. We intend to strengthen it.”
“NationGate will begin operations in February 2022 at Factory 7 with an initial build-out area of 100,000 square feet with eight surface mount technology lines for select customers and manufacturing floor space within Factory 7. We have expanded the entire rental structure to 227,700 square feet.