UCHI Technologies enjoys net profit jump, thanks to tax incentives

  • Increase in net profit partly due to MIDA tax incentives
  • Expects sales volume to be flat for financial year ending Dec 31, 2014
uchi technologies

 

UCHI Technologies Bhd, a company specializing in the design of electronic control systems, managed to grow its first half net profit by 21% to RM20.6 million, despite the decline in sales and pretax profit.
 
For the first half ended June 30, the company – which develops key components used by the electrical and electronic appliances industries especially those involved in the manufacturing of precision weighing scales and high end household appliances – registered a decline in revenue at RM46.24 million, versus RM49.68 million in the first half of last year.
 
Meanwhile, first half pretax profit for 2014 took a small dip at RM21.22 million, from RM23.59 million a year ago.
 
“The lower revenue and pretax profit are mainly due to lower sales volume and rise in average fixed cost,” said UCHI Technologies in its filing to Bursa Malaysia yesterday (Aug 19).
 
Although sales and pretax profit declined, the company was able to register higher net profit, mainly due to lower expenses on taxes.
 
The company, via its wholly-owned unit Uchi Optoelectronic (M) Sdn Bhd, has applied for pioneer status for its new products, namely Touch Screen Advance Display, High Precision Light Measurement (Optoelectronic) Equipment and Mix Signal Control System for Centrifuge/ Laboratory Equipment from the Malaysian Investment Development Authority (MIDA).

With pioneer status incentives, 100% of the statutory income derived from the design, development and manufacturer of the company's products will be exempted from income tax for five years.
 
However, there is a condition: applicants can only enjoy the tax incentives when the production level of the products reaches 30% of its capacity and that the five year tax incentives will start from the day its production reaches the threshold.
 
“In January 2013, the production level of the products has exceeded 30% of its capacity. Therefore, the group assumes production day shall be fixed on January 1, 2013, although the application to fix the production day is still pending approval from the relevant authorities,” revealed UCHI Technologies.
 
Nevertheless, the company remains upbeat on its prospects for the current financial year.
 
“To the best of our knowledge, in line with the volatile economic condition, the group expects sales volume to remain flat for the year ending December 31, 2014. Nevertheless, the group is confident that we will remain profitable and maintain a strong balance sheet,” said the company.
 
Although UCHI Technologies was established in Malaysia in 1989, its history can be traced back to 1981 when founder Kao De Tsan established Uchi Electronic Co Ltd in Taiwan.
 
De Tsan and his brother Te Pei started off the company by designing a control module for electronic bathroom scales for German-headquartered firm Krups Stiftung Co. It then moved on to develop control modules for electronic slicers and mixers, and eventually designed control modules for coffee maker.
 
As part of the company’s plan to expand its businesses, the Kao brothers decided to set up a manufacturing facility in Penang in 1989.
 
As of March 28, both the Kao brothers have an indirect shareholding of close to 31% of UCHI Technologies, while Lembaga Tabung Haji and Amanahraya Trustees Bhd have a respective 10.08% and 6.24% stake in the company.

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