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Stockwatch- Innovalues Precision (Singapore) on IES publication Oct 2006

Innovalues focuses on automotive sector

Within just a decade of its establishment, Innovalues Precision, a precision parts supplier, has achieved a string of accolades from the industry. The company, founded by Goh Leng Tse as a four-man set-up, is today a Mainboardlisted regional fi rm with a market capitalisation of more than $100 million. Innovalues has identifi ed the automotive industry to drive itself to greater heights.

“Judging from the industry trend, over the last three years, automotive suppliers from the US and Europe are doing more outsourcing from Asia,” says Steven Pung, the company’s business director. “Since we are in the precision-engineering business, we see opportunities. We can value-add to the industry, and our focus is on ‘critical-to-function, critical-to-safety’ components.”

Innovalues got its first big break from the automotive industry in 2003, when the company was introduced to Texas Instruments (TI), to supply parts that go into sensors used in brakes and airbags. These parts are then supplied to marquee names like Mercedes and BMW — a testament to their quality.

It is not easy being an automotive-parts supplier. The qualification process takes about a year and can cost the customer up to $1 million to do the necessary tests and processes, says Pung. Besides TI, the company has won a few more German customers, like Bosch and Siemens VDO. Pung says introductions by International Enterprise Singapore’s officers stationed overseas have been very helpful in opening doors. “Some of them can’t even differentiate between China and Singapore, but IE’s introduction and pre-marketing has made all the difference,” he adds.

In the financial year ended December 2005, the automotive segment contributed 10% of total revenue, up from a mere 3% in 2004. This year, analysts are expecting this proportion to hit 18%, and the company’s target is for automotive parts to generate half of its turnover by 2008. “We want the automotive business to be the core,” says Pung.

The company’s optimism is not without basis. US and European companies are relatively new in outsourcing to Asian manufacturers, which have helped them to enjoy costs savings of about 20%. Furthermore, Asia as a car market is probably the world’s fastestgrowing.

“They want to be near where the action is,” says Soh Wai Kong, Innovalue’s chief financial officer. To cater for this projected growth in the business, the company is adding capacity to its plants in Thailand, Malaysia and China. The total factory fl oor space is about 30,000 sq m, and will be increased to 47,000 sq m by the end of 2008, says Soh.

posted by gsg @ 7:27 PM