CHAIRMAN’S STATEMENT
Dear Valued Shareholders,
The financial year ended 31 July 2019 (“FY2019”) has been a demanding year for
V.S. Industry Berhad (“VS” or the “Group”) as we strive to expand our business
against the backdrop of a challenging operating environment.
Nevertheless, we manoeuvred through the difficult
environment by leveraging on our technical expertise,
proven capabilities, and track record. This has allowed us
to always emerge stronger than before.
In FY2019, we have reached another milestone for VS. We
registered our best-ever profit after tax and non-controlling
interest (“PATNCI” or “net profit”) of RM165.4 million
versus RM151.1 million in FY2018.
INDUSTRY AND BUSINESS OVERVIEW
The global economy is experiencing high degree of
volatility due to the on-going geopolitical issues such as
the trade dispute between the United States (“US”) and
China as well as the withdrawal of the United Kingdom
(“UK”) from the European Union (“EU”) (also known as the
“Brexit”) to name just a few.
Consequently, these geopolitical tensions also heightened
the uncertainties in the commodity and financial markets,
which, further strained the existing business operating
environment. According to the International Monetary Fund
(“IMF”), global growth experienced a slight slowdown to
3.6% in 2018 from 3.7% the year before.
On the local front, our Gross Domestic Product (“GDP”)
grew 4.7% in 2018 according to the Department of
Statistics Malaysia, primarily driven by the services
and manufacturing sectors. The growth, while weaker
compared to the 5.9% achieved in 2017, was nonetheless
in line with the World Bank’s expectation for Malaysia.
For the first and second quarters of 2019, the domestic
economy expanded 4.5% and 4.9% respectively. The
growth was once again chiefly supported by the services
and manufacturing sectors. Based on the Budget 2020 by
the Ministry of Finance Malaysia, the GDP growth for 2019
is expected to be 4.7%.
Over at VS, we were initially off to a good start in FY2019
but as we progressed, we started to brace ourselves for
headwinds ahead in anticipation of slower orders in the
second half. Fortunately, the actual impact of the softening
in orders turned out to be less austere than initially
thought, and instead, we closed the fiscal year on a strong
note thanks to the support from our key customers.
Notwithstanding the above, we wish to reiterate and
share with our valued shareholders that fluctuation in
orders is part and parcel of our business in the electronics
manufacturing services (“EMS”) industry. In our operating
history of more than 30 years, we have undergone several
economic cycles and overcome various challenges. VS
always emerge stronger, growing from strength to strength.
On a positive note, the US-China trade war has opened up
many opportunities for the Group as various multinational
corporation (“MNC”) from the US are looking to shift or
diversify their manufacturing base to Southeast Asia with
Malaysia being one of the choice locations.
We have established a special business development
taskforce to pursue these opportunities. Timing is very
opportune for the Group as we have ready capacity to take
on new business.
ANNUAL REPORT 2019 09
 CHAIRMAN’S STATEMENT
(cont’d)
Within the short span of a few months, the taskforce has,
in March 2019, clinched its first success by securing a new
major customer for the Group. Not resting on its laurels,
the taskforce continues to be in active discussions and
negotiations with several prospective customers who are
seeking to make Malaysia their new permanent production
base.
While the taskforce pursues new opportunities, we have,
at the same time, remained committed to our existing key
customers, further building on our relationships with the
focus of delivering exceptional value to them.
With these core emphases in mind, we buckled down and
continued to work tirelessly. Thanks to our management’s
and employees’ huge efforts and sheer determination, we
succeeded in overcoming the many challenges faced and
achieved the highest-ever net profit in the Group’s history.
PROSPECTS FOR FY2020
Against the backdrop of a taxing operating environment
and uncertainties in the global economy, we remain
optimistic on the Group’s long-term prospect. Amidst the
multitude of challenges, we see and sense a number of
exciting opportunities as well that would propel us forward.
Our optimism is also underpinned by the Group’s solid
fundamentals and strong execution skills, further boosted
by recent addition of new key customer. With our proven
track record and position as one of the leading EMS
providers in the region, we are confident to secure new
customers in the coming financial year.
On balance, it is a busy time ahead for the Group as we
continue to dedicate ourselves to expand the business and
enhance our shareholders’ value.
10 V.S. INDUSTRY BERHAD (Registration No. 198201008437 (88160-P))
APPRECIATION
On behalf of the Board, I would like to express my sincere
gratitude to our management and staff at VS for their
commitment, hard work, contribution to VS as well as for
collectively riding through the headwinds faced by the
Group.
I would also like to thank all our other stakeholders
including our valued shareholders and customers, business
partners, bankers, and suppliers for their continuous
support to VS.
This year, we are pleased to welcome Ms. Tan Pui Suang
and Dato’ Chang Lik Sean as the Independent Non-
Executive Directors. Given their vast experience, we are
confident that the both of them will contribute positively to
the Group as members of the Board.
Additionally, I would like to offer our appreciation to Tan
Sri Mohd Nadzmi Bin Mohd Salleh who relinquished his
role as Senior Independent Non-Executive Director as
well as Mr. Pan Swee Keat and Mr. Tang Sim Cheow who
stepped down from their roles as and Non-Independent
and Non-Executive Director, for their years of service and
contribution to the Group.
Finally, I would like to extend my heartfelt appreciation
to my fellow Board members for your dedication,
valuable advice, and service to the Board. I trust that the
stewardship of our Board will steer VS towards greater
heights.
DATUK BEH KIM LING
Executive Chairman