Notion eyes big rise in sales

Written by Soo Ai Peng
Monday, 03 May 2010 14:25

KUALA LUMPUR: Malaysia's Notion Vtec expects revenue to double in two years as the maker of camera and hard-disk drive parts plans an aggressive expansion to tap rapid growth of its global customers, said its chairman.

Notion Vtec, whose customers include global names like Nikon, Canon, Western Digital and Sony, is building two new plants in Malaysia and Thailand, Thoo Chow Fah told Reuters on Monday, May 3.

"We are embarking on major moves in scaling up to the next level," Thoo, one of the founders of the company, said in an interview.

"The two manufacturing facilities will boost our topline for the next couple of years substantially," he said.

Notion Vtec has seen a surge in investor interest after Nikon, a key customer for its camera parts division, took up a 10% share in the company in January this year.

Orders from Nikon account for more than a third of Notion Vtec's total sales.

"They find that we are quite a strategic supplier to them so they wanted to ensure long-term supply. For us, Nikon is a good customer and we want to sustain the business," said Thoo.

Some analysts say Notion Vtec's near-term profit outlook may be volatile due to its rapid expansion and rising commodities prices as well as the weakening of the US dollar.

The ringgit has strengthened by up to 7.8% against the dollar so far this year on prospects for strong Asian growth and speculation that China may allow its yuan currency to start appreciating again later this year.

"US dollar exchange rate has a big impact on our top- and bottom-line as we are selling mostly in US dollars," said Thoo.

Notion Vtec exports more than 90% of its products.

For every 5% drop in the US dollar exchange rate against the ringgit, Notion Vtec's net profit could fall by 1%-1.5%, he said.

Malaysian tech stocks have outperformed the main market since 2009 as investors bet the global economic recovery will boost demand for consumer electronics.

Notion Vtec is the only supplier of digital SLR camera parts in Malaysia but it competes with local players like Eng Teknologi and JCY International in the hard-disk drive segment.

Shares of Notion Vtec have gained 17% so far in 2010, compared to the 34% rise in the TECHNOLOGY [] sector index.

Rival Eng Teknologi was up 71% and JCY rose 32% during the same period.

Notion Vtec currently trades at 8.88 times 2010 earnings, compared to Eng Teknologi's 5.37 times and JCY International's 12.09 times, according to Thomson Reuters I/B/E/S. — Reuters