Chairman Statement

2016 Annual Report

Dear Fellow Shareholders,
On behalf of the Board of Directors, I am pleased to present you the Annual Report of the Company for the financial year ended 30 September 2016 .

Industry Landscape

Despite signs of rebound in the market in recent months, the Semiconductor Industry Association announced that global semiconductor sales in 2016 will remain flat at $335 billion, only 0.1% lower than 2015’s performance.

However, slow down in the global mobile phone market and smart devices market coupled with numerous volatile economic and political events throughout the year had an impact to our overall performance. The industry was certainly challenging in 2016 as we seek to double our efforts on all fronts in seeding business developments to increase our market share and uncover growth opportunities.

The market share of smartphone has shown a shift from non-China-based smartphone vendors to China-based vendors. In the last quarter of 2015, the top two non-China-based-smartphone-vendors and the top three China-based-smartphone-vendors has 39.1% and 14.8% worldwide market share respectively. In the third quarter of 2016, the numbers changed to 33.5% and 22.3% respectively, or a change of -5.6% and +7.5% respectively.

The shift demanded increased investment and focus in China. At the same time, such increase would take one to two years to produce significant results.

Financial Performance
For the financial year ended (FYE) 30 September 2016, the Group recorded revenue of RM21.98 million, a decrease of 32.55% year-over-year and a loss after tax of of RM2.74 million in the financial year. The main contributor was due to a drop in revenue from our enterprise storage market segment which recorded revenue of RM2.1 million, a decrease of 81%, as compared to FYE2015. As this market segment requires a high level of testing capability, effort and time, deployment for test solutions exhibit longer gestation periods. Nevertheless, with increased commitment in resources and technology development, we strive to achieve higher revenue for this segment in FYE2017. Contributions from our mobile devices segment remained consistent but modest due to overall slow down in the mobile device industry.

Revenue contributions from the Far East markets like China, Taiwan, Korea and Japan during the financial year has been encouraging and has outpaced contributions from other regions. To that effect, we have increased investments in human resources and talent to grow these markets with immense potential.

Operational and Corporate Overview

With the funds raised from the Initial Public Offering (IPO), we have been mobilizing our efforts on research and design into a wider scope of radio-frequency (RF) application solutions which will continue to pave the way for new and better product innovation for our customers. The mobile devices segment will continue to be our core strength as we up the pace of technology investments and regional market expansion in this space. Our R&D efforts are also focused on discovering high growth segments for non-RF applications as well.

As a reflection of our belief and commitment to high potential markets in the Far East Region, we have set up our maiden international operations office in Taiwan during the financial year.

While increasing our R&D effort and spending, as well as sales and marketing activities, we implemented new strategies in our supply chain and manufacturing in order to improve efficiency and costs. These strategies include change in organization structure, implementing new process flows and strengthening the role of material planning and procurement. We shall be able to see improved margin in the long run.

Prospects and Outlook
Despite the challenging and volatile environment in 2016, the Semiconductor Industry Associations, quoting from the World Semiconductor Trade Statistics, expects to see sales in semiconductor growing by 3.3% to $346 billion in 2017.

Growth markets are no less surprising to be in the Asia Pacific region while high potential areas will be in the space of RF, sensors and mixed-signal devices which have been the focus of Aemulus. At the same time, leveraging on existing platform, we shall design and enhance our tester offerings to different vertical market.

2016 was a year of change in the smartphone market landscape as we saw mainstream China-based smartphone companies including heavyweights like OPPO Electronics and Vivo Electronics contributing more than half of the total worldwide smartphone shipment. The drive towards local content in smartphones has become a trend. Therefore, our focus in business shall tap into these markets and trends that will require us stay close to technological developments that enable us to capture more business potential in 4G and the imminent 5G technology.

Other recent headways which we believe will be drivers for further growth was our partnership with Peregrine Semiconductor Corporation, a leading California-based manufacturer of high performance circuits, in the development of new microwave test capability. This is an important milestone for us to continue to expand our market reach beyond RF. Microwave frequency (µWave) test solution is widely used in anti-collision radar system in automobiles. We foresee an eventual need for µWave devices for autonomous vehicles and vehicle collision prevention which will drive our revenue stream in the future.

Another partnership that we are excited about is the signing of Memorandum of Understanding (MoU) with Shanghai Testrong Technologies Co., Ltd which will be the start of a close international co-operative effort in sales and marketing of Aemulus’ RF Test System to new customers in China. Undoubtedly, this partnership shall extend our market coverage and penetration in the Far East markets.

Being witness to the dedicated efforts of the management team and employees of Aemulus, the Board is optimistic that the continuous talent and technological investments as well as strategic partnerships will bear positive results and propel the Group forward in 2017.

Acknowledgements
On behalf of the Board, I would like to express my appreciation to our Chief Executive Officer and the management team and employees of Aemulus for their dedication and loyalty. As always our appreciation extends to all our business partners who have believed and supported us throughout. Last but certainly not least, we thank the shareholders for your trust in Aemulus and we wish all a prosperous 2017 ahead.
Chok Kwee Bee
Chairman

18 January 2017

2015 Annual Report

Fellow shareholders, 2015 has been a year full of challenges, excitements and achievements. riding on the wave of semiconductor test’s growth and wider adoption of smart gadgets, company revenue grew by 40% and net profit was up 13%. Both revenue and net profit numbers chalk new records in this 11-year-old-journey, contributed by continuous belief of our customers and our dedicated staff. This year as well, we successfully listed aemulus Holdings Berhad (“Aemulus”) in ACE market of Bursa malaysia securities Berhad.

 

Wireless communication, specifically Radio Frequency band operated has widely penetrated our daily lives. We are now well connected with our loved ones, friends and businesses be it near or far. We learned to share joy, moments and scenes in an easy and quick way thanks to smart gadgets. The wireless features of smart gadgets, in fact, are the ones responsible for these activities. Amoeba 7600 tester of Aemulus is well positioned to meet the test requirements of the electronic chips enabling wireless transmission and receiving.

Staying abreast with the volume of data consumed by each smart gadget, cloud storage has been pushed to new heights. Almost all apps residing in smart gadgets would require certain amount of data to be kept in the cloud. Our emails, pictures, videos, chats, contacts, personal information and documents are mostly backed up in the cloud, with their volume increasing everyday. Cloud storage comprises hundreds of millions of hard disk drives with the number growing rapidly every year. Amoeba 4600 tester of Aemulus was designed to meet this challenge. It verifies the functionality of certain electronic components mandatory to the operation of hard disk drives.

Both sectors, driven by the sales of Amoeba 7600 and Amoeba 4600 have contributed 60% of revenues to the company. We foresee that these two products will continue to shine in our book in the coming years. Ample of cash inflow from our impressive sales in 2015 has fortified our financial position, marked as the strongest in our history. Together with the fund raised from our Initial Public Offering (“IPO”), Aemulus can now better execute its plan to grow the portfolio of its product line by going deeper into the Research and Development (“R&D”) of tester architecture, designs and features.

We believe in investing in the future; Tester Research Laboratory is a new initiative by the company, to be fueled by funds raised during our IPO process. This laboratory shall be the cradle or incubator of our future tester design, focusing in RF, mixed-signal and wafer level test solutions. When it comes to investment in R&D, innovation and new concepts of tester design and test methodologies play a critical role in placing Aemulus ahead of the competition. We will continue to invest in talent and the necessary capital expenditures which , we believe will be rewarding and we shall be able to harvest the fruits of this investment over time.

Alongside with the investment in R&D, Aemulus has started to invest in business development activities related to the expansion of sales in People’s Republic of China and Taiwan. We believe that the future growth for the company would largely encompass these geographical regions. We expect to witness more tester evaluation and application activities in the near future that would eventually contribute positively to the company. The products to be brought in shall start with our flagship testers, which are Amoeba 7600 and Amoeba 4600.

On behalf of my colleagues on the Board, I wish to thank our Chief Executive Officer, management team and all the talented staff at Aemulus for their relentless dedication which contributed immensely to the success of the company thus far. A big thank you as well to all our clients who have supported and believed in us and our products all these years. We will continue to develop products and services that will greatly add value to your business and growth.

Last but not least, we would like to thank our fellow shareholders and other stakeholders who have supported us from day 1 and throughout our IPO. The total funds raised of RM24.58 million from our IPO will be deployed strategically for the growth of the company and in turn we aim to increase shareholders’ value.

We look forward to seizing the many opportunities we see in this industry and overcoming challenges as they come. We will steadfastly expand our product depth and variety, focus on market expansion, building customer relationships and ensuring we are ahead of the innovation curve for years to come.

I thank you for your trust in Aemulus.

 

 

Comments are closed