President's Statement

Dear Valued Shareholders,

When 2022 arrived, many held to the belief that it was to be the year when we finally got to break free from the chaos and devastating clutches of a pandemic that not only shook the world, but almost brought it down to its knees.

Unfortunately, hope for a smooth passage began to dwindle as acute labour shortages surfaced whilst supply chain disruptions continued to plague businesses.

Despite transitioning into the endemic phase, the outlook for many seemed dire and ominous as surging inflation and emergence of the tragic conflict in Ukraine soon followed.

The automotive sector in Malaysia, however, thrived despite undergoing two consecutive years of declining sales. According to an ¹online report in the New Straits Times, 2022 was a record-breaking year for the automotive industry in Malaysia where it went into top gear and rebounded. The Malaysian Automotive Association (“MAA”) in its press release announced that the Total Industry Volume (“TIV”) for vehicles in Malaysia in 2022 turned around and breached the 700,000 mark for the very first time at 720,658 units.

For APM and despite the challenges, the year began with much optimism, as we rallied to clear backlog from the previous year to meet overwhelming demand from our Original Equipment Manufacturer (“OEM”) customers by maximising our production capacity where some of our plants in Malaysia ran continuously at full capacity for protracted periods.

Against such operating environment and on behalf of the Board of Directors of APM Automotive Holdings Berhad (the “Company”) and its subsidiaries (the “Group”), I wish to take this opportunity to present the Company’s Annual Report for the financial year ended 31 December 2022.

FINANCIAL PERFORMANCE OF THE GROUP IN BRIEF

The Group’s financial standing remains healthy and robust where for the financial year ended 31 December 2022, the Group’s revenue increased exponentially by RM515.1 million or 42.1% to a record high of RM1,739.2 million.

Our Marketing Division performed well beyond expectation and generated an impressive revenue growth of 33.4% from RM223.2 million in 2021 to RM297.8 million during the year, supported by higher demand for exports (especially from America and Australia) and local Replacement Equipment Manufacturer (“REM”). In addition to the above, revenue from our operations in Indonesia also surged to RM104.9 million in 2022, buoyed by higher demand for suspension parts from all market sectors such as exports, the Indonesian OEM and REM.

Accordingly, although dampened by higher material prices as well as increased logistics and staff cost (due to the increase of minimum wage from RM1,200 to RM1,500 effective 1 May 2022), the Group’s Profit before Tax (“PBT”) rose to RM54.1 million from RM17.1 million in 2021 with higher share of profits from our joint ventures in Indonesia, which contributed significantly towards such improved profitability. Further details of the Group’s financial performance can be found in the Management Discussion and Analysis section of this Annual Report.

DIVIDEND

Dividend payment is often defined as the distribution of corporate profits by a corporation to its shareholders, based upon the number of shares they hold. We believe investors often view consistent dividends as a sign of a company’s strength and that the company’s management has positive expectations around future earnings growth.

For us, dividend payments not only allow us to share our profits with our shareholders but also accord us with a unique opportunity to thank our shareholders for their faith in us and for their enduring support where we hope such payment will incentivise them to continue holding our stocks.

Accordingly, the Board declared and approved two tranches of interim dividends amounting to 14 sen per ordinary share for the financial year ended 31 December 2022 (2021: 7 sen per ordinary share). The first interim dividend of 7 sen per ordinary share was paid on 21 December 2022, whereas the second interim dividend of 7 sen per ordinary share to be paid on 10 May 2023.

The approved dividends will result in a total dividend payment of RM27.4 million and is declared out of retained profits as the return attributable to the owners of the Company for the financial year ended 31 December 2022 was at RM26.4 million.

AWARDS, ACCOLADES AND ACHIEVEMENTS

Awards and accolades vastly inspire those who receive them. Apart from being just mementos and symbols of achievement and appreciation, they can also motivate the recipient’s belief and performance. They stand as proof of how dedicated and sincere recipients had been in the task assigned to them. Awards do not only acknowledge success; they recognise many other qualities including ability, struggle, effort and, above all, excellence.

Most parts of the year were spent meeting the pent-up demands of the previous year from our OEM customers following the easing of Covid-19 restrictions and the nation’s transition into the endemic phase. Nonetheless, I am proud to announce that the Group still managed to garner several awards and accolades, including the Best Quality Award from Proton, the Special Appreciation Award from Perodua and the Safety and Health Leadership Award from the Department of Occupational Safety and Health.

These awards and accolades clearly underscore our commitment towards quality, safety and excellence. Rest assured that we will continue with our efforts to better ourselves in delivering outstanding performance, products and services.

ENHANCING SHAREHOLDERS’ VALUE

Many describe shareholders’ value as a reward for possessing shares of a company. It is indeed the value delivered by the Company to the shareholder. Increasing shareholders’ value therefore is of prime importance for us and we strive to do so by having the interests of shareholders in mind while making decisions, as we believe the higher the shareholders’ value, the better it is for the company and its Management.

Therefore, we are constantly in search for new business opportunities as we strive towards maximising profitability through creating new revenue streams, optimising fixed cost utilisation through consolidation and rationalisation, dispensation of superfluous equipment, reallocation of personnel, restructuring of sales strategies, decreasing unit cost and providing for consistent dividend pay-outs, whenever possible but without sacrificing sustainability and our integrity and principles.

CORPORATE GOVERNANCE

We see corporate governance as akin to a plethora of processes, frameworks, methodologies and structures that are used to direct and manage businesses and affairs of a company with the aim of promoting prosperity and corporate accountability with the ultimate objective of realising longterm shareholder value taking into consideration the interests of other stakeholders.

As a socially responsible corporate citizen, we remain committed to adopt high standards of corporate governance. Our risk management framework is not only robust in managing the vagaries of business risks but has been tested in the midst of a very challenging operating environment. Our internal control measures are designed to boost investor confidence, enhance our profile, ensure sustainable growth and create long-term shareholder value.

BIG DATA AND INDUSTRY 4.0

The term ‘big data’ has become more than a catchphrase or buzzword in recent times – and for good reason. By leveraging on the potential wealth of digital insights available at one’s fingertips and embracing the power of business intelligence, informed and data driven decisions (like those that will lead to commercial growth, evolution, and a healthier bottom line) can be made with confidence and at lightning speed.

With proper digitization, making data driven decisions will become a norm where efficiency and productivity can be improved, lower operational costs will no longer be an aspiration but a reality, customer experience will be improved, transparency enhanced, competitive edge boosted and decision making process quickened.

While we recognise the importance and need for digitization and data driven decisions, we also acknowledge that Rome was not built in a day. Thus, we are looking into the automation of our operations gradually.

An example of this can be seen in our recently installed and commissioned automated seat production line.

This line is one of the first in Malaysia to have an automatic seat production process where seat frame welding lines and seat track assembly are carried out by robots.

It features amongst others: Material Handling Seat Frame Robot Welding that comes with Automated Part Pick & Place, integrated with welding process; Automated Material Transferring Process to transfer sub-welding items to the welding assembly line; Automated Racking and Storage System which can scan, transfer, store and order customer seats automatically; and Seat Track Automatic Assembly Machine with automated part assembly involving 13 processes in one machine.

With this new line, error and manpower utilisation are significantly reduced. This plant is now capable of consistently achieving quicker and higher volume of production without any compromise on quality and finishing.

SUSTAINABILITY

Economic, environmental and social considerations as well as governance essentially drove our Sustainability Statement for last year. This year and in line with the Malaysian Code on Corporate Governance 2021 Edition issued by the Securities Commission Malaysia on 28 April 2021, our Sustainability Statement represents a continuance of the above.

Our sustainability journey for the financial year under review can be viewed in the Sustainability Statement section of this Annual Report.

THE AUTOMOTIVE INDUSTRY OUTLOOK FOR 2023

²In line with MAA’s expectations for 2023, we envisage Malaysia’s TIV to moderate going into 2023 following what was believed to be a recordbreaking year in TIV performance in 2022 in the absence of the sales and service tax (“SST”) exemption, surging inflation and anticipated global recession which could all weigh against car sales and earnings.

Russia’s sustained invasion of Ukraine, soaring energy prices, rising interest rates, and the cost of living crisis, have all contributed to a market environment that is similar to the great inflation of the 1970s. Hence, for us, 2023 would be a year for reflection, consolidation and recasting of strategies as the world looks to free itself from a debilitating pandemic, global economic slowdown and geopolitical instability.

GOING FORWARD

The Malaysian Electric Vehicle (“EV”) market is currently in its infancy but growth is expected to be rapid in the months ahead seeing that ³Malaysia aims to grow the electric vehicle market share to 38% by 2040 through the Low Carbon Nation Aspiration (Aspirasi Rendah Karbon) 2040, which is part of the National Energy Policy 2022-2040 (Dasar Tenaga Negara, or DTN).

According to a 4 Star online report, Malaysia Automotive, Robotics and IoT Institute (“MARii”) chairman Datuk Phang Ah Tong noted that there are huge opportunities for Malaysia to tap into the EV eco-system. He said, “With EVs having a lot of electronic components and with Malaysia already having a solid semiconductor base, it is a shoo-in for the country to play into the space. It is best for Malaysian companies to aim to support EV development such as providing components, rather than to try and make and build our own EVs,” he tells StarBizWeek.

In view of the above, the Group will continue its pursuit of EV related ventures, improve competitiveness through the enhancement of production efficiency via technology and automation and strengthening its regional foothold in ASEAN, especially Indonesia.

ACKNOWLEDGEMENTS

Following his retirement from the Board last year, 2022 also saw the retirement of Mr. Siow Tiang Sae as the Group’s Chief Business Development Officer. In addition, I wish to announce the retirement of Mr. Low Seng Chee, who has relinquished his role as the Group Chief Executive Officer and Executive Director effective 1 April 2023. Moving forward and due to Mr. Low Seng Chee’s vast experience in the automotive industry, he will continue to serve on the Board as a Non-Executive Non-Independent Director.

In light of the above, I would like to take this opportunity to express my sincere gratitude to both Mr. Low Seng Chee and Mr. Siow Tiang Sae for their immeasurable contributions to the Group, and wish them all the best in all their future undertakings.

On behalf of the Board, I would like to express our heartfelt appreciation to the Management and staff for their tireless efforts and contributions to the Group’s progress, as well as our shareholders for their support and confidence. I would also like to thank all our business partners, suppliers and distributors for their unwavering commitment and loyalty over the years. In concluding, I express my sincere gratitude to my fellow Board members for their valuable advice and guidance in shaping the Group’s strategies as we move forward.

On behalf of the Board,

DATO’ TAN HENG CHEW
President