[SINGAPORE] Shares of mainboard-listed InnoTek rallied on Monday (Oct 13) morning on news that it had clinched projects for Nvidia and Shenzhen-listed IEITSystems.
The stock soared to a three-year high and hit S$0.68 soon after trading started, with some 8.4 million shares changing hands. It last traded higher in late 2021. By 3 pm, the counter was up 37 per cent at S$0.75, 36 per cent above its Friday closing price of S$0.55,
The precision components manufacturer announced on Monday that two of its subsidiaries had clinched projects to produce components for Nvidia and IEIT Systems.
Its subsidiary, Magix Mechatronics (Dongguan) Company, secured initial precision machining orders for components used in Nvidia products, with production expected to commence in Q4 FY2025.
Its other subsidiary, Sun Mansfield Manufacturing (Dongguan) Company, won a new project to produce metal casings and components for graphics processing unit servers for IEIT Systems, with manufacturing set to start in October.
IEIT Systems is a provider of data centre and cloud computing infrastructure listed on the Shenzhen Stock Exchange. It is part of the Chinese state-owned Inspur Group, which is the country’s largest server manufacturer and one of the top global suppliers by market share.
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Faced with a changing disk drive industry more than 15 years ago, InnoTek – previously Magnecomp, a supplier of high-precision disk drive components – sold its core business to a big customer at a “good price”. It then focused on growing the “very small stamping business” that was left.
Today, the precision components manufacturer is stable but too small to be of interest to most investors, said its chairman Neal Chandaria in an interview with The Business Times earlier this year. “We need to scale our business, and we need to enter sectors and segments which are going fast, which get investors excited.”
Among the promising new sectors it has identified are electric vehicles and graphics processing unit (GPU) servers that are riding the artificial intelligence (AI) wave.
For the half year ended Jun 30, Innotek reported an 87 per cent slide in profit of S$405,000 on revenues of S$102 million, down 15 per cent from the year before.
In its review of the results, the group said in a recent announcement that the growing transition from petrol cars to electric vehicles in China continues to drive automotive sector volatility, but expects robust long-term demand for GPU servers in line with the growth of AI and cloud computing.