Hon Hai Precision Industry

Maxnerva pushes ‘smart factory’ projects in China with contract manufacturing giant Foxconn

PUBLISHED : Sunday, 03 July, 2016, 7:33pm
UPDATED : Sunday, 03 July, 2016, 9:53pm

Unfazed by another fiscal year in the red, Hong Kong-listed Maxnerva Technology Services expects to turn around its fortunes as a major specialist contractor under China’s ambitious plan to become a global manufacturing powerhouse.

“We see a lot of opportunity in the so-called Industry 4.0 space, a high-growth segment that is known on the mainland as China Manufacturing 2025,” Maxnerva chief executive Sam Baker told the South China Morning Post.

Maxnerva, with a market capitalisation of HK$1.7 billion, was created in October last year from the acquisition of listed company Daiwa Associate Holdings by the Asia-IO Acquisition Fund for a total consideration of HK$533.35 million.

It has also added new shareholders, including South Korean conglomerate SK Holdings, securities firm Huatai Financial Holdings and Taiwan-based Hon Hai Precision Industry, the world’s largest contract electronics manufacturer that is more known under its Foxconn trade name.

“Our anchor relationship with the Foxconn group gives us great confidence in our ability to significantly build our client portfolio and further develop alliances with global technology partners,” Baker said.

On May 19 last year, the State Council announced the long-anticipated China Manufacturing 2025 master plan to become a world manufacturing industry leader in 10 years through intelligent digital production platforms.

“Industry 4.0, which was a term coined by Germany’s Siemens, goes beyond automation as it cuts costs and raises efficiency by using smart systems,” Baker said. “These merge key components, including the Internet of Things (IoT) and cloud computing, big data, artificial intelligence, robotics and sensors.”

Baker said Maxnerva has taken the lead as a China-based systems integration specialist for Industry 4.0 because of anchor customer Hon Hai, the main supplier of Apple’s iPhones and operator of the largest network of contract electronics factories across the mainland.

Hon Hai has contracted Maxnerva for its current batch of “smart factory” projects in Wuhan, Chongqing, Zhengzhou and Shenzhen.

“The Foxconn group is at the forefront of Industry 4.0 implementation in China, with five systems integration projects led by Maxnerva and supported by various strategic technology partners like SK, IBM and Siemens,” Baker said.

He said Hon Hai’s initiatives provided “strong validation” to Maxnerva’s capabilities, while likely helping it influence Industry 4.0 standards and drive demand for more smart factory projects.

Having a stream of Foxconn-related projects would also bring a sharp increase in Maxnerva’s annual sales. The firm expected to generate a total of HK$3.1 billion in revenue from Hon Hai across its three financial years to March 2018.

Maxnerva last week reported a wider net loss of HK$97.59 million in the 12 months ended March 31, compared with the HK$39.72 million net loss in its previous financial year.

That loss was largely attributed to the restructuring of the company as a specialist systems integrator for Industry 4.0 projects, which led to the disposal of its low-margin personal computer and electronic components distribution businesses.

Total revenue declined 14 per cent to HK$111.32 million, down from HK$130.31 million a year earlier.

The company’s share price rose 1.69 per cent to close at HK$2.39 on Thursday.

There is currently no research measurement on Industry 4.0 solutions, but Baker said Maxnerva targeted “the sweet spot” between the forecast US$293 billion global systems integration market by 2018 and the estimated US$8.4 billion IoT in manufacturing market in the same year.

Mainland China’s total market for information technology services this year is predicted to reach 114.99 billion yuan, according to research firm Gartner.