No stranger to The Edge Billion Ringgit Club (BRC), Uchi Technologies Bhd bagged its second consecutive award for highest return on equity (ROE) over three years in the industrial products and services sector.
According to the data curated, Uchi’s ROE had been on the rise during the review period of 2018 to 2020. It came in at 35.6% in FY2018, climbed to 48.5% in FY2019 and rose further to 49.1% in FY2020. This translated into an adjusted weighted ROE of 46.2% over three years.
During the period under review, Uchi’s profit after tax (PAT) dropped slightly to RM69 million in FY2018 from RM70.5 million in FY2017. It returned to its growth path in FY2019 with a PAT of RM75.95 million, and expanded further to a record high of RM83.8 million in FY2020.
The group’s earnings was without doubt helped by its pioneer status granted by the Ministry of International Trade and Industry, which allows the company to be exempted from income tax for a period of five years from Jan 1, 2018.
What is even more impressive is Uchi’s net cash while keeping up its dividend policy to distribute at least 70% of its net profit since 2003. The group is known for its regular dividends. In FY2020, it declared a dividend per share of 17 sen — a payout ratio of 91%. In FY2019 and FY2018, it declared 16 sen and 14 sen respectively.
Uchi was founded in 1981 in Taiwan (then known as Uchi Electronic Co Ltd) by a Taiwanese, Ted Kao De-Tsan. The 62-year-old is currently executive director and majority shareholder of the company with 19.8% equity interest.
Kao moved the manufacturing company from Taiwan to Perai, Penang, after eight years in business, setting up Uchi Electronic (M) Sdn Bhd and Uchi Optoelectronic (M) Sdn Bhd.
Since then, the group has been primarily operating as an original design manufacturer (ODM) that specialises in the design, R&D and manufacturing of electronic control systems, which includes software development, hardware design and system construction.
Uchi Optoelectronic is the group’s main subsidiary. It is involved in the design and manufacturing of real-time centralised energy measurement and control systems, high-precision hot fluid temperature control systems, ultra-low temperature and mass-sensing control systems, as well as touchscreen advance displays, high-precision light measurement equipment and mixed-signal control systems. The assembly of its products is done through Uchi Electronic and Uchi Dongguan, in Malaysia and China respectively.
Uchi counts European multinational corporations, especially those from Switzerland and Germany, among its biggest clients — something Kao did back in 1980 when he was engaged by German company Robert Krups GmbH & Co KG to design electronic bathroom scales.
Perhaps unsurprisingly, many premium household and commercial appliances made by global companies such as coffee machines and laboratory and industrial instruments such as precision weighing scales, deep freezers and centrifuges use modules developed by Uchi.
In its 2020 annual report, Uchi managing director Charlie Ong Chye Lee remarked that despite the challenges brought on by the Covid-19 pandemic, the group managed to act quickly and execute responsive strategies to deliver superior and sustained value for its customers and shareholders. For the eighth consecutive year, the group had kept its customer rejection rate below 0.2%, recording a commendable rate of 0.13% in 2020 — something Ong took pride in.
Another key highlight was that Uchi managed to improve upon its on-time shipment performance to 84.49% and that the group will continue to monitor, evaluate and respond with urgency to the impact of the Covid-19 pandemic, which will continue to cause an imbalance in the global supply of freight containers, according to Ong.