Chairman Message
Dear Shareholders,
On behalf of the Board of Directors (the “Board”) of InnoTek Limited (“InnoTek” or the “Group”), I present to you our Annual Report for the financial year ended 31 December 2024 (“FY’24”).
Over the past several years, we have outlined our strategies to broaden our product range, manufacturing capabilities and customer base, expand our geographical footprint, and move up the value chain.
The InnoTek management team has been working tirelessly to implement these changes, even as we record our ninth consecutive year of profitability.
It gives me great pleasure to share that we have made significant progress, and built a firm business foundation to position us for growth in the years ahead. Indeed, we have already begun to harvest the early fruits of our labour.
Turnover for our latest GPU Server business segment grew 73.7% to S$35.6 million in FY’24, compared to S$20.5 million in FY’23. Born from a strategic partnership with a leading GPU server company, InnoTek now manufactures and assembles GPU server chassis used in Artificial Intelligence (“AI”). Demand for these products will grow alongside the rapid adoption of AI, in turn driving order volumes.
Meanwhile, we continue our foray into the emerging sectors of gaming machines, medical equipment, and financial equipment. Our automobile (“Auto”) sector is also offering new components catered towards Electric Vehicles (“EVs”), which are gaining significant traction.
Despite a challenging operating environment, our other business segments – Auto, Office Automation (“OA”) and TV/Display – recorded higher sales, underscoring our strong execution ability and dedication to improving our processes, quality and efficiency.
Meanwhile, our manufacturing footprint in ASEAN saw significant growth, increasing by 144.8% to S$31.1 million in FY’24 from S$12.7 million in FY’23. The Group continues to explore opportunities in Southeast Asia to strengthen our value proposition to customers seeking a “China + 1” manufacturing strategy.
These improvements have also allowed us to deliver a stronger performance in FY’24, with an improved top and bottom line. Allow me to go through them in more detail.
FY’24 revenue increased 15.8% to S$238.0 million from S$205.6 million in FY’23, lifted by higher contributions from almost all our business segments.
For the Auto segment, higher international sales in China and increased order volumes for EV components, which offset lower sales of traditional petrol car components.
Turnover from the TV/Display segment grew on the back of new product launches from key customers, while the OA segment experienced growth, lifted by higher sales in ASEAN, partially offset by a decline in orders from China.
Gross profit increased 10.6% to S$36.4 million in FY’24 from S$32.9 million a year ago. Accordingly, gross profit margin for the year under review stood at 15.3%, compared to 16.0% a year ago.
As shareholders may be aware, the Auto segment is facing significant volatility, which has led to projects with lower margins, unexpected volume declines, or reaching end-of-life prematurely; in response, InnoTek is strategically streamlining its Auto customer base, minimising the risk of similar disruptions. As a result, the Group recorded S$3.8 million allowance for automotive tooling and inventory obsolescence.
An additional S$2.2 million charge was also included for property taxes and impairment of other assets of the Group.
Excluding the effects of the above, net profit attributable to owners of the Company for FY’24 would have been S$11.8 million, compared to S$6.3 million before exceptional items in FY’23.
THE ROAD AHEADLooking ahead, we are optimistic that financial performance for FY’25 will be better compared to FY’24, as we continue to execute our transformation strategies and accelerate business momentum.
However, the pace of growth could be hampered by challenges such as higher operating costs, rapidly evolving trade dynamics arising from US-China trade tensions, and an increasing shift of manufacturing operations out of China into Southeast Asia.
InnoTek is expanding its range of GPU products with new models and liquid cooling systems, so as to maintain our lead as a key supplier. We are also realigning our Auto products to better serve our global Tier 1 customers.
The TV/Display segment and OA segment are expected to remain stable, as the Group continues to maintain strong customer relationships, enhance technical capabilities, and optimise cost to stay competitive.
In Thailand, our facility has secured fresh OA and Automotive orders from new and existing customers, which will translate into higher contributions in the year ahead. Our facilities in Vietnam have also recorded encouraging growth in FY’24, and we expect this trend to continue in the year ahead.
Subsequent to the year-end, we also established Mansfield Surface Treatment (Dongguan) Co., Ltd. for secondary processing to give us greater control over the production process, enhance our capabilities, improve quality control and cost efficiency, while shortening lead times.
DIVIDENDTo reward our loyal shareholders, the Board of Directors has proposed a first and final cash dividend of 2.0 Singapore cents per ordinary share, consistent with last year’s dividend, subject to approval at the upcoming Annual General Meeting (“AGM”). We thank you, our shareholders, for your support throughout the years, and are delighted to share with you the fruits of success.
Appreciation
I would like to extend our appreciation to our business associates and valued clients, whose trust and faith motivate us to continue delivering innovative products and solutions.
I would like to thank the Group’s management and employees for their dedication and contributions; InnoTek would not be where we are today without your efforts. In particular, I would like to thank our CEO, Mr Lou Yiliang, for his outstanding leadership and vision in our transformation journey.
Mr Teruo Kiriyama, who has served over 9 years as a board member, will be stepping down as Independent Director. I would like to express my deep gratitude to Mr Kiriyama for his invaluable guidance throughout his tenure and wish him all the best in the future.
I would also like to warmly welcome Mr Ng Hin Lee, who joined the Board as Independent Director on 26 April 2024. With over 30 years of financial and managerial experience, Mr Ng is an experienced director on several listed and non-listed companies. Mr Ng’s counsel will be vital in guiding InnoTek to the next level, and I look forward to working closely with him.
I am also delighted to welcome Ms Angeline Tan, who joined us as Group CFO in June 2024. Bringing over 30 years of experience in finance, human resources, market development, and business operations, I am confident that Ms Tan will further strengthen our management team.
Last but not least, I wish to thank our valued shareholders for your support throughout our journey. We remain committed to delivering sustainable long-term value to you.
Mr. Neal Manilal Chandaria
Chairman, Non-Executive and
Non-Independent Director
