7 days ago
New acquisition, healthcare segment fuelling Sunningdale Tech: non-exec chairman Koh Boon Hwee
[SINGAPORE] Precision plastics engineering company Sunningdale Tech has continued to grow even after delisting from the Singapore Exchange (SGX) in 2021, and has now acquired an industry peer.
The company purchased Sanwa Group for an undisclosed sum on Aug 7, with the deal expected to grow Sunningdale's revenue to S$850 million.
Sunningdale's non-executive chairman Koh Boon Hwee liked this acquisition in particular as it allows a Singaporean company to remain in the hands of a Singapore business.
'I actually prefer that outcome rather than having it being sold to a non-Singaporean entity. I'm hopeful that the combination will allow both companies to continue to grow together,' Koh told The Business Times.
The acquisition makes sense for Sunningdale as Sanwa's main business segment is industrial, adding on to the former's precision consumer, automotive and healthcare segments. While Sanwa has an automotive segment in its revenue stream, the products are different from Sunningdale's.
This means there is no overlap of product offerings, giving Sunningdale an expanded product range in the automotive segment.
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'On top of that, it brings us from 17 plants to 23 plants, and I think that's very helpful for our combined customer base,' said Koh. These plants are spread out over nine markets and most continents, which gives flexibility to Sunningdale's customers, he added.
With the world unlikely to return any time soon to a global trade system that allowed goods and people to move more easily across borders, it was fortunate that Sunningdale acquired its first US plant back in 2020. The footprint of that facility has trebled since the purchase, standing it in good stead as customers there decide if they should onshore some of their production.
'The fragmentation (means that) the trading system we have been used to for the last 30 years isn't going to come back; so I have to adapt Sunningdale to this new reality,' said Koh.
The acquisition of Sanwa was financed by internal resources and a 'small bank loan', he added, without Sunningdale having to turn to fundraising from external parties.
Integrating the company with Sunningdale is not expected to take too long, as the intention is to retain most of its employees.
Besides this acquisition, Sunningdale is also growing its healthcare segment, which has seen double-digit growth annually for the last six years, from 10 per cent of revenue in 2018 to about 30 per cent currently. The goal now is to expand the segment to more than 40 per cent in the next four years.
The consumer and automotive segments will also enlarge in tandem, but due to their mature nature and reliance on macroeconomic conditions, they cannot grow as fast as healthcare, noted Koh.
Sunningdale has also continued to grow organically since delisting.
Growth and exits
Based on filings pulled by data platform Handshakes, Sunningdale's 2024 revenue stood at S$722.7 million. The company breached S$700 million in 2021, and revenue has been above this mark since then. Earnings too have hovered around S$35 million for 2023 and 2024, with net profit margins hovering between 4 and 5.7 per cent between 2020 and 2024.
The variance in earnings is due to Sunningdale's customers' product road maps, where old products may be wound down more quickly than new products are ramped up, said Koh.
'But because we are highly diversified, our business actually hasn't been that cyclical. Our growth is steady,' he noted, adding that there has not been much volatility in Sunningdale's revenue. Its team has been disciplined on costs, and ensures that no one customer accounts for more than 10 per cent of its revenue.
This growth has continued despite foreign exchange headwinds, which have resulted in Sunningdale taking a 5 to 6 per cent hit in revenue. This is the main challenge the company faces – but it is on track to still expand about 1 to 2 per cent this year.
Koh does not rule out a return to the SGX as part of providing a liquidity event for Sunningdale's investors, which includes its employees. But currently, plans are still open-ended, as the company has no shortage of private investors.
'There are advantages to being a private company. We are in no hurry,' said Koh.
Sunningdale also would not turn down investments from parties such as 65 Equity Partners if they are open to it. But Koh noted that while SGX is an option, especially amid moves to make the local bourse more attractive, any pressure to return might not work.
'The conditions have to be correct, you can't pressure companies to do things they don't want to do.'
