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Thoughts On Internet Of Things From Valuetronics Holdings Limited’s Management

In July, Valuetronics Holdings Limited  (SGX: BN2) published its annual report for the year ending 31 March 2018 (FY2018). When I read through the report recently, I found an interesting area of discussion that I want to share in this article: Management’s thoughts on the Internet of Things (IoT) trend.

Valuetronics’ business

As a quick introduction, Valuetronics is an integrated electronics manufacturing service provider that is headquartered in Hong Kong. It offers a combination of design, engineering, manufacturing, and supply chain support services for electronic and electro-mechanical products.

Internet of Things

In his letter to shareholders, Valuetronics’ chairman and managing director, Tse Chong Hing, explained what IoT is and the growth opportunities the trend brings:

“IoT refers to how consumer devices and industrial equipment are increasingly being connected to the internet, and this opens up new opportunities and demands from consumers, companies and governments.

The IoT enables information gathering and the use of software to manage devices in order to increase efficiency, enable new services or achieve other health, safety or environmental benefits. As a result, more and more devices today are embedded with more sensors, chips and connectivity modules, so as to enhance the user experience and making them ‘smart’ devices.”

IoT’s impact on Valuetronics’ business

Tse went on to explain how the IoT trend is affecting Valuetronics’ business:

“As more and more customer’s devices start to include IoT features, Valuetronics is well placed to ride on this trend to explore business opportunities to include more IoT products to our portfolio, leveraging on our deep engineering expertise that we have built up in the design and manufacturing of such smart devices.

Therefore, as IoT becomes more prevalent across the board, we believe that both our CE and ICE segments will stand to benefit.

…the IoT megatrend does not affect our customers alone, but also manufacturers like us. Together with Machine to Machine (“M2M”) communications, the deployment of IoT helps manufacturers to increase automation, improve data communication and efficiency monitoring, and helps in self-diagnosis and analysis in order to be more productive and reduce the dependency on labour. This transformation of traditional industries like manufacturing using technology is part of Industry 4.0.

At Valuetronics, we have embraced Industry 4.0, which is why we are progressively introducing more automation and upgrading our Manufacturing Execution System (“MES”). The use of automation and an upgraded MES helps us to maintain consistent high quality standards and improve efficiency in our operations while allowing us to provide lean and flexible manufacturing services to meet our customers’ needs.”

A final thought

From all the above, we can see that the IoT trend could affect Valuetronics’ revenue as well as operations, and the company’s management has positioned the company to benefit from it.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.