NOTION (0083) - Notion VTec to launch budget smartphone
March 24, 2015 : 10:20 AM MYT
KLANG: Hard disk drive (HDD) component maker Notion VTec Bhd ( Financial Dashboard) plans to launch its own smartphone brand “Trendi” by May this year to create a new revenue stream for the group.
“The group aims to sell about 1,000 units of its budget smartphone within the first week of its launch. We intend to price it below RM500,” executive chairman Thoo Chow Fah told reporters after Notion VTec’s annual general meeting yesterday.
“It will depend on how the market respond before we decide whether further investment is required,” he added.
Thoo did not disclose the identity of Notion VTec’s business partners in the development of the smartphone, but said the product will be sourced and assembled in China.
“If the market response is good, we are targeting to sell 50,000 to 100,000 units a year,” he said.
Thoo revealed that the firm (fundamental: 1.55; valuation: 1.2) has budgeted RM2 million for this project, which has used up less than RM1 million so far.
“We hope to start another revenue stream for the group, given that the HDD market has become more challenging,” he said.
However, Thoo dismissed the possibility of the group eventually turning into a smartphone-centric company, saying instead that its HDD segment has always been Notion VTec’s strongest revenue contributor, at about 50% of its total turnover now.
Thoo said Notion VTec’s financials should improve in the current financial year ending Sept 30, 2015 (FY15). He said the weaker ringgit against the US dollar augurs well for the export-based company.
Notion VTec slipped into the red in FY14, the first time since its initial public offering in 2005, due to lower sales, an impairment for its Australian investment, and inopportune foreign exchange hedges. It recorded a net loss of RM27.74 million in FY14 compared with a net profit of RM20.09 million in FY13.
“I believe we will see a smaller loss for FY15 because our foreign currency hedges are expiring in April, May, and June,” he said.
Thoo conceded that Notion VTec did not expect the ringgit to weaken so much when the company hedged the local currency against the US dollar at 3.20 about a year ago. At current rates, Thoo said Notion VTec will enjoy higher income when it exports its products and the group is confident of turning its bottom line around by FY16.
Additionally, he admitted that the decision to invest in Australian Stock Exchange-listed silver producer Alcyone Resources Ltd was a mistake, due to the prolonged slump in silver prices.
The group made an impairment allowance for its 12.7% stake in Alcyone, which amounted to RM14.67 million. The group was initially bullish about Alycyone’s turnaround and that the price of silver would improve. Alcyone, however, did not turn around as planned due to inadequate funding and the continued low silver prices. Alcyone has since been put under receivership by one of its note holders.
Thoo gave assurance that this is a one-off impairment, saying that the group is not likely to invest in a similar type of business in the future.
http://www.theedgemarkets.com
March 24, 2015 : 10:20 AM MYT
KLANG: Hard disk drive (HDD) component maker Notion VTec Bhd ( Financial Dashboard) plans to launch its own smartphone brand “Trendi” by May this year to create a new revenue stream for the group.
“The group aims to sell about 1,000 units of its budget smartphone within the first week of its launch. We intend to price it below RM500,” executive chairman Thoo Chow Fah told reporters after Notion VTec’s annual general meeting yesterday.
“It will depend on how the market respond before we decide whether further investment is required,” he added.
Thoo did not disclose the identity of Notion VTec’s business partners in the development of the smartphone, but said the product will be sourced and assembled in China.
“If the market response is good, we are targeting to sell 50,000 to 100,000 units a year,” he said.
Thoo revealed that the firm (fundamental: 1.55; valuation: 1.2) has budgeted RM2 million for this project, which has used up less than RM1 million so far.
“We hope to start another revenue stream for the group, given that the HDD market has become more challenging,” he said.
However, Thoo dismissed the possibility of the group eventually turning into a smartphone-centric company, saying instead that its HDD segment has always been Notion VTec’s strongest revenue contributor, at about 50% of its total turnover now.
Thoo said Notion VTec’s financials should improve in the current financial year ending Sept 30, 2015 (FY15). He said the weaker ringgit against the US dollar augurs well for the export-based company.
Notion VTec slipped into the red in FY14, the first time since its initial public offering in 2005, due to lower sales, an impairment for its Australian investment, and inopportune foreign exchange hedges. It recorded a net loss of RM27.74 million in FY14 compared with a net profit of RM20.09 million in FY13.
“I believe we will see a smaller loss for FY15 because our foreign currency hedges are expiring in April, May, and June,” he said.
Thoo conceded that Notion VTec did not expect the ringgit to weaken so much when the company hedged the local currency against the US dollar at 3.20 about a year ago. At current rates, Thoo said Notion VTec will enjoy higher income when it exports its products and the group is confident of turning its bottom line around by FY16.
Additionally, he admitted that the decision to invest in Australian Stock Exchange-listed silver producer Alcyone Resources Ltd was a mistake, due to the prolonged slump in silver prices.
The group made an impairment allowance for its 12.7% stake in Alcyone, which amounted to RM14.67 million. The group was initially bullish about Alycyone’s turnaround and that the price of silver would improve. Alcyone, however, did not turn around as planned due to inadequate funding and the continued low silver prices. Alcyone has since been put under receivership by one of its note holders.
Thoo gave assurance that this is a one-off impairment, saying that the group is not likely to invest in a similar type of business in the future.
http://www.theedgemarkets.com
