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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
Burned Out? Why Elsoft’s Test Equipment Business Needs a Reboot
Once upon a time, Elsoft Research Berhad was riding high, churning out test and burn-in systems like nobody's business. These clever contraptions found eager customers in the booming world of smartphones and shiny gadgets. Life was good.
But then came 2019. Demand for LED flash testing started drying up as smartphone makers got a little too comfortable with “good enough,” and product designs moved on. And just when Elsoft was wondering what else could go wrong, along came COVID-19, slamming the brakes on capex and shipping schedules. Revenue took a nosedive.
In 2021 and 2022, things perked up a bit - thanks to delayed orders finally getting delivered and customers emerging from lockdown hibernation. But this was a short lived rebound. The core smart device segment never came back, and Elsoft’s newer bets - like automotive and medical test equipment - were still warming up on the sidelines.
Today, Elsoft sits in what we’d call the “Quicksand quadrant” in the Fundamental Mapper It is not sinking dramatically, but it is definitely stuck. The company is making all the right noises - more R&D, new markets, a pivot to EVs and medical devices - but real growth is still a work in progress. Until those bets pay off, Elsoft’s story is less “comeback kid” and more “patient in rehab.”
KESM Industries Berhad is principally engaged in burn-in and testing services for the semiconductor industry. It is recognized as the world's largest independent burn-in and test service provider, primarily serving global semiconductor manufacturers.
However, KESM’s revenue declined 20 % from 2019 to 2024. According to the company, the revenue decline was not due to market loss or obsolescence, but rather a strategic pivot into higher-value segments (EV and AI), hindered by macroeconomic disruptions and long product development cycles.
But the turnaround signs in 2024 suggest that the business may be at an inflection point.
• Revenue rose 6 % in 2024 compared to that in 2023. This marks the first year-on-year growth since 2021.
• After a net loss in 2023, KESM recorded a modest net profit of RM0.2 million in 2024.
• KESM noted improvements in the automotive semiconductor demand, especially for EV applications
• The company is seeing rising orders for advanced power management chips used in AI systems, a new but rapidly growing vertical.
In short, 2024 marked a bottoming out and a pivot toward recovery. While the profit was still minimal, the operational and strategic indicators point to early-stage momentum that could accelerate if EV and AI testing volumes continue to grow.
Over the past six years, Unisem (M) Berhad has evolved from a cost-focused OSAT player into a technology-driven, sustainability-aligned enterprise.
This transformation involved embedding ESG principles and digitalisation into its operations, expanding its role to a collaborative innovation partner, and investing in modern, environmentally sustainable facilities.
Despite this strategic shift, there was no sustained uptrend in profits from continuing operations. While profit after tax in 2022 was approximately three times higher than in 2019, by 2024 it had declined to a level below that of 2019.
Operationally, there was little improvement in profit margins over the six-year period, although the Selling, General and Administrative margin remained stable. As a result, ROE declined at 12 % per year compounded over the period.
According to the company, this performance stems primarily from cyclical demand weakness, underutilised capacity, and cost escalations. These challenges have masked the operational improvements and technology investments the company has made.
However, its capacity investments, customer alignment, and cost control suggest it is well-positioned to rebound once demand normalizes.
To track Unisem’s recovery, investors should watch for rising semiconductor demand and improved plant utilisation. Margin and ROE improvement would signal better cost absorption and capital efficiency. New customer wins and progress on technology and ESG goals would further support a sustainable rebound.
Globetronics’ revenue has halved over the past six years, with PAT falling from RM46 million in 2019 to RM11 million in 2024.
While gross margins held up, the shrinking topline meant fixed costs weighed more heavily on profits. The company attributes the decline to lower customer volume loadings, its exit from the quartz timing business, and COVID-related disruptions.
But the deeper issue is this: new products have not scaled fast enough to replace legacy lines. In a tech-driven industry, that is a serious concern. Globetronics’ own disclosures cite softening demand and reduced volume from key customers, but offer little mention of successful new product rollouts or major customer wins.
This absence is telling. Over several years, the company has explained revenue weakness through external factors, yet there has been no concrete sign of innovation-led growth. In a sector where new product milestones are typically highlighted, this silence suggests execution gaps in product development and commercialization.
This is the heart of Globetronics’ challenge. In tech, if new doesn’t grow, old revenue goes. A sustained turnaround will depend on the company regaining its ability to bring new, scalable products to market.
Its position in the Turnaround quadrant in the Fundamental Mapper reflects this fundamental issue.
Over the past six years, Inari Amertron Berhad has achieved a 4 % CAGR in revenue while PAT grew at a double rate of 8% CAGR.
This stronger PAT growth, however, did not stem from improved cost leverage or margin expansion. As noted in the 2024 annual report, “the Group’s administrative expenses rose in line with revenue,” indicating no significant improvement in fixed cost efficiency.
Despite growing profits, Inari’s ROE fell from 18% in FY2019 to just 10% in FY2024. This decline reflects an outsized expansion in capital relative to earnings. For instance, between FY2019 and FY2024, total assets and shareholders’ equity rose at CAGR of 18 % –19%, well above the 4% revenue CAGR.
The company’s growth trajectory is also marked by a high concentration of revenue from a single customer. As disclosed: “approximately 90% of the Group’s revenue is derived from one major customer.”
This underscores a key investment risk, especially in a sector where technological shifts and client decisions can swiftly alter demand.
Taken together, Inari exhibits the financial strength typical of companies in the Gem quadrant of the Fundamental Mapper. However, its declining ROE and high customer concentration suggest elevated investment risk, even in the presence of profit growth.
Growth Without Profit? Mapping D&O's Strategic Reset
D&O Green Technologies is a vertically integrated automotive LED solution provider, evolving into a one-stop platform for smart automotive lighting systems. A key innovation is its seddLED - the world’s first smart digital automotive LED that integrates both LED and IC within a single package.
Over the past six years, D&O achieved a 13% CAGR in revenue, yet PAT grew at only 2% CAGR. This discrepancy is largely due to a significant decline in gross profit margin, which dropped from 28% in 2019 to 20 % in 2024, although partially offset by improved Selling, General, and Administrative efficiency.
The margin erosion stemmed from several factors - less favourable product mix, rising input costs, higher depreciation and overhead, industry pricing pressure and foreign exchange volatility.
These structural and external challenges weighed on profitability, despite strong topline performance. It is no surprise, then, that ROE in 2024 is roughly half of what it was in 2019.
However, the outlook is not entirely bleak. While gross margins remain below historical levels, D&O’s strategic pivot toward higher-margin products, deeper vertical integration, and sustained investment in automation are showing early signs of a turnaround.
A sustained recovery will hinge on scaling production volumes, cost stabilization, and market acceptance of its advanced offerings. Given this context, it is clear why D&O falls into the Turnaround quadrant in the Fundamental Mapper.
If you are looking for deeper investing insights into the semiconductor sector on Bursa, don’t miss our upcoming podcast on 5 June — “AI & Global Demand: Fueling the Next Chip Rally?” — where we explore investing opportunities for Malaysian semiconductor stocks.
JHM’s Inflection Point: Signs of a Turnaround Ahead?
JHM Consolidation Berhad is a one-stop engineering and manufacturing solutions provider serving the automotive, industrial, semiconductor, and telecommunications sectors.
It supports the semiconductor sector at the upstream level by supplying precision mechanical parts for semiconductor equipment. It also produced hermetic enclosures and connectors used in semiconductor modules, and assemble electrical and optical modules for semiconductor and industrial applications.
Over the past six years, JHM’s revenue has declined at a compounded rate of approximately 2% annually. This decline was driven by reduced orders from key automotive customers, the lingering effects of the COVID-19 pandemic, supply chain disruptions, delayed project launches, and rising input and labor costs.
As such from a profitable position in 2019, JHM slipped into losses in 2024. The decline was exacerbated by a narrowing gross profit margin and higher Selling, General, and Administrative expenses. These structural pressures challenged operating leverage, despite capacity expansion initiatives.
However, 2024 may mark the bottom. The Q1 2025 results indicate revenue improvement and a narrower loss. Additionally, JHM reportedly secured a contract to supply automotive parts to the U.S. and is exploring EV battery pack assembly - initiatives that could support a turnaround and eventually improve its position in the Fundamental Mapper.
If you are looking for deeper investing insights into the semiconductor sector on Bursa, don’t miss our upcoming podcast on 5 June — “AI & Global Demand: Fueling the Next Chip Rally?” — where we explore investing opportunities for Malaysian semiconductor stocks.
CSC Steel Holdings Berhad is one of the more prominent cold-rolled steel producers in Malaysia. The company is majority-owned by China Steel Corporation (CSC) of Taiwan, and several members of its senior management team are seconded from the parent company. Its principal raw material - hot-rolled steel coils - is primarily sourced from the parent group ensuring supply chain stability.
While the steel industry is inherently cyclical, CSC Steel has demonstrated resilience across market cycles, having remained profitable in nearly every year over the past two decades. The sole exception was in 2014, when the company incurred a loss due to a combination of global oversupply, aggressive low-cost imports, and a sharp decline in steel prices.
The most recent industry bottom occurred in 2020, following the peak in 2022. At present, the market appears to be in the downward leg of the cycle. Despite this, CSC Steel managed to remain profitable throughout the 2019–2024 period, although 2021 was an outlier year in which the company did not generate positive operating cash flow.
Over this five-year span, the company achieved a Return on Equity (ROE) ranging from 1.7% to 9.9%, with an average of approximately 5% -ma modest but consistent performance.
What stands out about CSC Steel is its valuation. The current share price of RM 1.18 trades significantly below its Graham Net-Net value of RM 2.00, a conservative estimate often used as a proxy for liquidation value. Given its clean balance sheet, consistent profitability, and strong backing from CSC Taiwan, CSC Steel does not exhibit any signs of financial distress.
This combination of subdued business performance and low investment risk places CSC Steel on the borderline between the “Goldmine” and “Turnaround” quadrants of the Fundamental Mapper - an apt reflection of its value-oriented appeal.
ASTEEL’s Reinvention: Can a Downstream Focus Reverse Years of Losses?
ASTEEL Group (formerly known as YKGI Holdings Berhad) is today primarily engaged in the manufacturing and trading of steel-related products.
Prior to 2019, the company operated in both the upstream and downstream steel segments. Its upstream operations—which included the production of cold rolled coils and galvanized coils - were capital-intensive and faced intense competition from low-cost imports, particularly from China. As a result, the group suffered significant losses due to industry overcapacity, volatile steel prices, and thin margins.
In 2018–2019, the company exited the upstream business with the disposal of its Bukit Raja plant. This strategic move aimed to stem losses, reduce debt, and reposition the group toward higher-margin downstream manufacturing and trading activities.
In 2023, the company was rebranded as ASTEEL Group, with a renewed focus on downstream steel products - particularly roofing systems and structural components.
Although the company has not yet returned to consistent profitability - recording losses from 2022 to 2024 - there are signs of recovery. Over the past six years, revenue has grown by 4.3% CAGR, and gross profit margins have shown improvement, indicating early progress in its turnaround efforts.
As such you should not be surprise to see that if falls into the Turnaround quadrant in the Fundamental Mapper.
Recasting the Business: How Mayu Global Left Steel Behind
Mayu Global, formerly a steel-centric industrial group prior to 2020, has transformed into a diversified entity with property development now a central pillar of its business.
In 2019, the steel segment generated approximately RM150 million in revenue. However, this has declined by about two-thirds to an average of RM50 million annually over the past three years. This shift away from steel is understandable, as the segment has been consistently unprofitable over the past six years.
While the move into property development was initiated by the previous board in 2018, the change in controlling shareholders around 2022/23 appears to have solidified the group’s strategic pivot. Under the new leadership, there has been a marked increase in execution focus and capital commitment toward property projects.
In 2023, property development accounted for about ¾ of the group’s total revenue. Although this reduced to half in 2024, the property development segment still accounted for a big part of the profits in 2024.
Given the business mix today, peer comparisons would be more meaningful against property developers rather than steel manufacturers.
Hot rolled steel prices have risen by about 20% since the start of the year. Will this boost the performance of the steel flat companies? If you want to understand more about the impact of the steel price on other Bursa flat steel companies, join me this at this Thursday podcast
