• Last Friday, SGX welcomed the secondary listing of PC Partner on the SGX Mainboard by way of introduction. It will be setting up its global headquarters in Singapore, and plans to expand the Group’s footprint in the Southeast Asian region, including the set-up of a high-end VGA Cards manufacturing facility in Batam, Indonesia.
   
• PC Partner is a leading provider of innovative and reliable products, with a focus on video graphics cards (VGA Cards) and electronics manufacturing services (EMS) solutions offerings. Its own brands include ZOTAC, Inno3D and Manli. The Group has been operating for around 27 years and has established offices worldwide across four main geographical markets, with customers across more than 80 countries.
   
• The Group does not have a fixed dividend policy, but the Board may, from time to time, declare dividends if it considers that the profits justify such payments. The directors of the company proposed an interim dividend of HK$0.20 for the first half ended June 2024, up from HK$0.10 in the year-ago period.
   

PC Partner has been operating for approximately 27 years and has established offices worldwide across four main geographical markets, including the Asia-Pacific region, North and Latin America region, the People’s Republic of China, and the Europe, Middle East, Africa and India region with customers across more than 80 countries.

The Group is a Hong Kong-based manufacturer of VGA Cards for Original Design Manufacturer/Original Equipment Manufacturer (ODM/OEM) customers and other personal computer (PC) products under its own brands, namely ZOTAC, Inno3D, and Manli. The Group also provides EMS to globally recognised brands, including major providers of Automatic Teller Machines (ATM) and Point-of-Sales (POS) systems and various types of consumer electronic products.

PC Partner shares are primary listed on the HKEX and secondary listed on the SGX following the introduction. The company intends to seek a conversion of its secondary listing status to a primary listing status on the SGX-ST upon the satisfaction of the applicable free float requirements and delist from the HKEX subsequently thereafter.

Future Opportunities from the Introductory Document

• Gaming PC Segment
  • Gaming PCs continue to lead the market in delivering the most demanding and visually stunning gaming experiences with their superior processing power and graphical capabilities. As a result, the Gaming PC segment is expected to remain a crucial driver of growth. Industry estimates project the gaming computer market to grow by US$22.31 billion, with a compound annual growth rate (CAGR) of 9.71% between 2023 and 2028.
• Recent Growth in Artificial Intelligence (AI) and Machine Learning (ML)
  • The recent rate of growth in AI and ML holds great potential for graphics cards. As AI algorithms become increasingly sophisticated and data-intensive, GPUs have emerged as indispensable accelerators for training and inference tasks. This opens opportunities for graphics card manufacturers as they can capitalise on this trend by developing specialised hardware and software solutions tailored to the unique requirements of AI-driven applications, solidifying their positions in the burgeoning AI market.
• Proliferation of edge computing and Internet of Things (IoT) devices
  • This phenomenon presents a fertile ground for graphics cards to expand their reach, as there is a growing need for efficient, high-performance computing solutions capable of processing and analysing data in real time due to the volume of data generated. Discrete VGA Cards manufacturers can tap into the burgeoning market for edge computing solutions and establish themselves as key players in the evolving IoT ecosystem. 

Highlights from the Introductory Document

Competitive Strengths

• Established and prominent brands such as renowned house brand ZOTAC, known for its VGA Cards. With over 15 years of establishment, ZOTAC’s distinct product design has established a reputation in the market. 
• Innovative product design, extensive expertise in product development and planning, and proficiency of engineers in the R&D teams.
• In-house manufacturing capabilities allows for the Group to maintain control over production planning, enabling timely scheduling to meet stringent time-to-market demands.
• Close relationship with both AMD and NVIDIA, the dominant suppliers of discrete GPU technology.

Business Strategies & Future Plans

• Expand Geographical Presence and Diversify Operational Risk
  • Expand the Group’s footprint in the Southeast Asian region, including the set-up of a high-end VGA Cards manufacturing facility in Batam, Indonesia, which is expected to be operational by 1Q2025.
  • Shift the Group’s global headquarters from Hong Kong to Singapore to be the Group’s principal place of decision making to direct, control and coordinate all business and operational activities
• Develop New Product Offering
  • Leverage on the Group’s accumulated know-how and reputation in the manufacturing of discrete VGA Cards and other PC-related products to continue to develop new products and reach out to more customers and countries.
  • The Group will continue investing in new product development as one of its core business strategies, optimising its product mix based on product cycles and the average selling prices of its various products.
• Strengthen Marketing and Sales Resources and Network
  • PC Partner has a strong sales and marketing team of 166 employees as of June 2024. It aims to forge strategic partnerships with key retailers and e-commerce platforms to expand reach and accessibility.
  • Utilise a multi-faceted approach, combining targeted digital advertising campaigns, attending computer and technology trade shows such as COMPUTEX To drive brand awareness.

Key Risk Factors

(Refer to page 20 of the Offer Document for a complete list of risk factors)

• The Group is exposed to concentration risk of reliance on NVIDIA as their sole supplier of GPUs and may be adversely affected by any disruption or termination of the Group’s business relationships with NVIDIA or fluctuations in their supply of GPUs.
• Continued or enhanced threats of trade tariffs, import and export restrictions, foreign regulations and/or other trade barriers may have a material adverse effect on the Group’s business.
• The sale of VGA Cards accounts for a significant proportion of the Group’s revenue and profitability, and adverse developments could result in a substantial reduction in the income of the Group.
• The Group’s business activities are subject to seasonality, with generally higher turnover during new product releases which typically occur in 3Q or 4Q of each calendar year. This leads to seasonal fluctuations in turnover and operating income throughout the different periods of the calendar year.

Financials

• The Group’s revenue experienced a rebound of 18.4% from 1H2023 to 1H2024, rising from HK$4,175.4 million to HK$4,944.2 million. This growth was driven by an increase in sales of VGA Cards mainly due to greater orders on ODM/OEM VGA Cards in 1H2024. The Group’s VGA Cards business recorded an increase of HK$754.8 million, or 22.6%, from HK$3,333.9 million in 1H2023 to HK$4,088.7 million in 1H2024.
• The Group recorded net profit attributable to owners of HK$194.1 million in 1H2024, up from HK$20.1 million in 1H2023. This increase was mainly due to an improvement in gross profit margins which offset higher expenses for the period.

• The Group’s unaudited Earnings per share rose year-on-year from 1HFY23 to 1HFY24, from HK$0.052 to HK$0.500.
• The Group does not have a fixed dividend policy, and will only distribute dividends after considering factors such as the Group’s current and future operations, liquidity position, corporate development plans, etc. The Group proposed an interim cash dividend of HK$0.20 per share for H1FY24, up from HK$0.10 in the year-ago period.

Technology Hardware, Storage, and Peripherals-related Plays on the SGX

After the listing of PC Partner, SGX now lists 35 actively traded Technology Hardware & Equipment-plays with a total market capitalisation of approximately S$6.3 billion. These counters, sorted by market cap are in the table below.

SGX also has Thailand’s Delta Electronics listed as a Singapore Depository Receipt (SDRs), click here for more about SDRs. 

Source: SGX, Refinitiv, Bloomberg (Data as of 15 November 2024). 

• Venture Corporation offers high value-added and highly efficient manufacturing services to MNCs using state-of-the-art manufacturing process technology and test development capability.
• Aztech Global is a key technology enabler for the connected world of tomorrow, with a focus on providing one-stop design and manufacturing services. 
• PC Partner is a leading provider of innovative and reliable products, with a focus on VGA Cards and EMS solutions offerings.
• Valuetronics  is an integrated Electronics Manufacturing Services provider with principal business segments ranging from Consumer Electronics to Industrial and Commercial Electronics Products.
• Comba Telecom is a global leading wireless solutions provider with its own research and development ("R&D") facilities, manufacturing base, and sales and service teams. 

Additional Information from the Introductory Document

Overview of PC Partner

PC Partner was founded in Hong Kong in 1997 and was engaged by ATI (now AMD) to be a contract manufacturer in 1998. In 2006, the Group started manufacturing video graphics cards based on NVIDIA GPUs whilst also beginning to distribute its own ZOTAC brand of video graphics cards. The Group partially acquired ASK Technology and Manli Technology in 2008, before fully acquiring them in 2011. In 2012, the Group listed on the main board of The Stock Exchange of Hong Kong. 

The Group seeks to expand its geographical presence with a new Global Headquarters setup in Singapore, to be the Group’s principal place of decision making. This move is part of the Group’s strategy to expand its footprint in the Southeast Asia region, including a set-up of new manufacturing facility in Batam, Indonesia, which is envisaged to be operational by 1Q2025. 

Shareholding Information

As at the last practicable date (12 November 2024), the percentage of shareholding in PC Partner is:

• 14.28% held by Executive Director, Chairman and Chief Executive Officer Wong Shik Ho Tony
• 14.19% held by Non-Executive Director Ho Wong Mary Mee-Tak
• 7.13% held by Executive Director and Executive Vice President Wong Fong Pak
• 6.47% held by Executive Director and Chief Operating Officer Leung Wah Kan
• 5.54% held by Executive Director Ho Nai Nap
• 1.50% held by Executive Director Man Wai Hung
• 50.89% held by Other Shareholders
   

Did you know?

PC Partner's factory in Dongguan, China, houses a total of 23 Surface Mount Technology (SMT) lines of various configurations. This allows the Group to produce approximately 10,000 high-end VGA Cards per eight-hour shift, with the capacity for lower-end graphics boards or other EMS products ranging from 50% to 100% more. The under-construction Batam factory will operate 3 SMT lines with a maximum capacity of 6,000 units of high-end VGA Cards if operating at 2 shifts a day.

Enjoying this read?

• Subscribe now to our SGX My Gateway newsletter for a compilation of latest market news, sector performances, new product release updates, and research reports on SGX-listed companies.
• Stay up-to-date with our SGX Invest Telegram channel.