This article by Jennifer Tan (left, Director, Research & Products, Equities & Fixed Income, at the Singapore Exchange) was published in SGX's kopi-C: the Company brew series on 29 March 2018. The article is republished with permission.
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The founder and Chief Executive Officer of SGX-listed Excelpoint Technology Ltd began his career in the tech sector, with roles ranging from quality assurance to manufacturing.
"An entrepreneur's path in the electronics sector is never an easy one," Phuay said with a wry grin. |
Cutting-Edge
On the financial front, the Group has increased revenues by a compounded annual growth rate (CAGR) of 18% between 2015 and 2017, with sales surpassing the US$1 billion mark for the first time last year. Net profits have increased by a CAGR of 36% over the same period.
For the financial year ended 31 December 2017, Excelpoint achieved record revenue of US$1.1 billion, up 16% year-on-year, while net profit gained 14.8% to US$8.1 million.
"Compared to 30 years ago, our business today is very different, and the ways in which we service our customers have also evolved significantly," noted Phuay, who clinched the Entrepreneur of the Year Award in the Electrical and Electronics Industry category at the 2017 Asia Pacific Entrepreneurship Awards.
"In the past, it was all about brands and consumer demand. Now, the focus is not just on branded white goods, but also the latest cutting-edge technologies and infrastructure development."
 In the past, it was all about brands and consumer demand. Now, the focus is not just on branded white goods, but also the latest cutting-edge technologies and infrastructure development.- Albert Phuay |
Right from the start, Phuay was quick to set up research and development (R&D) centres to boost service offerings for clients.
"Initially, we employed field application engineers to solve problems onsite on behalf of suppliers. But we soon realised the FAEs were not enough - we needed to get closer to the market and focus on developing new technologies."
The Group set up its first R&D centre in 1994, and has added another in China since then, with each centre helmed by a team of professional engineers. About a quarter of Excelpoint's workforce - one of the highest percentages in the industry segment - comprises trained engineers.
"Focusing on R&D was the most strategic decision that we made, which helped secure Excelpoint's future," Phuay said.
"The rewards have been huge - though not necessarily in profit terms - as our efforts signalled to suppliers and customers that we were totally committed to the industry, and to meeting their needs."
Three decades ago, Phuay was optimistic about the outlook for the electronics distribution business, despite a myriad of challenges that included the need for superior product innovation and strong interpersonal skills to keep abreast of the competition.
"Today, I remain equally, if not more, confident of our prospects. Everyone thinks this is a sunset industry, but they could not be more wrong. Growth over the next decade will be very steady," he noted.
"This business will still exist in the next 20 years, because there are gaps between customers and suppliers that need to be filled by distributors, especially for emerging markets such as China, India and Southeast Asia, in areas like time-to-market, because products get outdated very quickly in this industry," he added.
Time-to-market refers to the length of time it takes to design and manufacture a product before it is available for sale to the consumer.
 Future-Proof |
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Key growth drivers for the distribution industry include China's "One Belt, One Road" (OBOR) initiative, which is expected to boost regional infrastructure demand, as well as the rise of the digital economy, including the Internet of Things (IoT).
"Right now, IoT is only a fraction of the ecosystem that it can, and will, become." |
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Unflagging Ambition
Two years ago, Phuay put in place a succession plan - not just for the next, but also subsequent generations - to ensure the company stays on a growth trajectory.
He is unwavering in his goal to develop Excelpoint into an Asian nexus between customers and suppliers, offering the best-in-class design services and integrated R&D solutions.
| As long as you are flexible enough to adapt to industry changes and can stay at the forefront of the technology curve, your distribution business will never die. - Albert Phuay |
"Our management team is always improving and evolving to ensure we are ready to take on the next milestone of growth - to expand our current revenue of US$1 billion to US$2 billion," he said.
He aims to build a 百年老店 (bai nian lao dian) - a business with a 100-year legacy - for both staff and shareholders. "We've just crossed the 30-year mark, we have another 70 to go," he said with a laugh.
"As long as you are flexible enough to adapt to industry changes and can stay at the forefront of the technology curve, your distribution business will never die."
So far on this front, Phuay has few concerns. "I'm very proud of our management team - about 70% to 80% of our senior management staff have been with Excelpoint for more than 15 years, and are industry leaders in their own right."
As a result, he sleeps like a baby every night. Phuay attributes his cheerful spirit and good health to a stubbornly positive attitude.
"It's all about your mindset - I make it a point to be happy and energetic every day," the father of two daughters and a son, aged 20 to 29, said with a laugh.
The Chinese proverb 人生不如意的事, 十之八九 - the observation that in life, eight or nine out of 10 things will usually not go your way - is a constant reminder of the need to choose positivity.
"Some things will always go wrong, but if you focus on the 80% to 90% of these occurrences, you will never be happy. All that negativity will just create more trouble and chaos in your life," he said.
"On the other hand, a positive attitude will go a long way towards resolving problems."
Financial results
| Year ended 31 Dec (US$'000) |
2017 | 2016 | 2015 | 2014 |
| Revenue | 1,146,394 | 988,240 | 828,283 | 728,968 |
| Gross Profit | 60,907 | 55,112 | 47,742 | 44,275 |
| Profit attributable to equity holders | 8,098 | 7,053 | 4,355 | 7,083 |
| Quarter ended 31 Dec (US$'000) | 4QFY2017 | 4QFY2016 |
yoy chg |
| Revenue | 297,524 | 250,220 | 18.9% |
| Gross Profit | 17,077 | 14,751 | 15.8% |
| Profit attributable to shareholders | 2,813 | 2,554 | 10.1% |
Source: company data
| Outlook & Risks | ||
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Excelpoint Technology Ltd
Excelpoint is a leading regional B-to-B business platform providing quality electronics components, engineering design services and supply chain management to original equipment manufacturers (OEMs), original design manufacturers (ODMs) and electronics manufacturing services (EMS) providers in the Asia Pacific region.
It ranks among the Top 25 Global Franchised Distributors List from EBN in 2017. Excelpoint works closely with its principals to create innovative solutions to complement its customers' products and solutions. Aimed at improving its customers' operational efficiency and cost-competitiveness, the Group has set up research and development (R&D) centres in both Singapore and China that are helmed by professional engineers. Established in 1987 and headquartered in Singapore, Excelpoint's business presence spans more than 40 cities across Asia Pacific, with a workforce of over 700 people from different nationalities and cultural backgrounds.
For the company's financial results for the year ended 31 December 2017, click here.
The company website is: www.excelpoint.com.
The ccompany's Stock Facts page is here.
