Wong Engineering Corp Bhd ... May 2008

Wong Engineering specialises in providing design, manufacturing and integration of mechanical and electrical solutions embedded in the enclosures.

What’s NEXT?

It is poised to receive a boost from its metal enclosures designing and manufacturing business. A combination of factors from the group's strategic alliance with Amada Co Ltd, a new customer base, and growing investments in the medical industry in the Asia Pacific, provide grounds for a positive evaluation of the group's performance over the next two years.

*** In October 2007, Wong Engineering formed a partnership with the Japan-based Amada Co Ltd, a specialist manufacturer of metal processing machines. The group invested RM5mil for a new production line, using state-of-the-art metal processing technologies from Amada at its Kulim Hi-Tech Park plant ***

Amada’s technology enables them to reduce the production process for the fabrication of enclosures used in a variety of medical, semiconductor, and industrial equipment.
This helps them to lower their cost of production and speed up the delivery of the products to its customers.

Another key competitive edge of the group is the ability to provide mechanical and electrical solutions embedded in the enclosures.

Wong Engineering has also secured new customers in the medical equipment manufacturing industry. They have recently secured several new customers in Malaysia, Singapore, and Europe. The prospect of increasing its business in the medical equipment sector looks bright, as more such companies in the US and Europe are shifting their production sites to the region. This will increase the outsourcing of metal component manufacturing and designing jobs in the region.

Wong describes the group's business model as catering for those industries that demand a 'low volume, but high-mix of enclosures. Prior to 2006, they were involved in metal stamping of various metal components used in the general and electronic industries.

In 2006, they restructure to focus on designing and fabricating metal enclosures and frames, which gives a higher margin of profitability. Initially it focuses on the production of metal enclosures and frames for telecommunication, test, and high-speed printing equipment.

They are planning to tap the oil and gas and aerospace industries.
In view of the higher cost of raw materials, the group was now (2008) working on a strategic pricing with its customers to stay competitive in the global market.


Financial Results …

The decision to diversify into the designing and fabricating enclosures propelled the group back into the black in financial year (FY) ended Oct 31, 2006. with a pre-tax profit of RM2mil on the back of RM36.8mil turnover. It recorded a pre-tax loss of RM1.6mil on turnover of RM25.7mil in FY 2005. In FY 2007, it recorded a pre-tax profit of RM1.6mil on the back of RM39mil in revenue.

For the first quarter ended January 31 2008, a pre-tax profit of RM255,000 on revenue of RM9.4mil was achieved, compared to RM1.3mil and RM9.9mil in the previous year corresponding quarter.

The lower profit is due to the stringent accounting practice of the group which requires provision for the slow moving inventory amounting to RM539,000. Otherwise, the pre-tax profit would be higher.