Dufu posts best profit in four years, readies Valdor plants

Dufu Technology Corp Bhd, the Penang maker of precision parts for hard disk drives, made a net profit of RM15.55 million in the July–September quarter. That is 48% more than a year earlier and its highest quarterly profit in four years, The Edge reported. Revenue rose 25.6% to RM89.62 million.

Dufu says its move into machining, fabrication, sheet metal and stamping is on track for 2027. Its annual report shows where that work will go: two new factories it is buying in Valdor, Seberang Perai Selatan.

The quarter

• Revenue: RM89.62 million, up from RM71.37 million. Sales of hard disk drive (HDD) parts rose about 22% and other parts about 36%
• Profit: RM15.55 million, up from RM10.5 million, helped by a fair value gain of about RM2.8 million on listed shares. The previous quarter made RM13.9 million
• Nine months: net profit of RM37.07 million, up 82.9%, on revenue of RM258.31 million
• Spending: RM17.58 million on property, plant and equipment in nine months, against RM3.86 million a year earlier
• Outlook: Dufu expects HDD demand to stay strong, driven by nearline and enterprise storage for AI, cloud computing and data centres. A stronger US dollar has helped, but it warns that currency moves and higher oil-linked costs from the Middle East conflict could weigh on earnings

The Valdor factories

• The deal: in December 2022 its subsidiary Dufusion Sdn Bhd agreed to buy two single-storey detached factories with double-storey offices from the developer, Merbau Sejati Sdn Bhd, for about RM45.4 million
• The land: Plot 3 (about 10,864 sq m) and Plot 3A (about 10,868 sq m), 21,732 sq m of freehold land in all, on Lots 629, 398, 414 and 418, Mukim 12, Seberang Perai Selatan. The built-up area is 129,600 sq ft
• How Dufu priced it: it benchmarked Batu Kawan Industrial Park land at RM60 to RM90 psf and contractors' building costs at RM200 to RM230 psf, and took the middle of each, RM75 and RM215 psf
• Progress: the factories are being paid for by stages. By the end of 2025 Dufu had paid 85%, or RM38.6 million. The annual report expects them to start operating in early 2027
• Why: Dufu said its Bukit Minyak plant was "well utilized, leaving minimal room for expansion", and that Valdor is near it

Dufu in Penang

• Bayan Lepas Phase IV: head office and machining plant at Plot 19, on about 177,691 sq ft of land leased to 2051
• Bayan Lepas Phase I: assembly plant at Plots 160 and 163, Jalan Sungai Keluang
• Bukit Minyak: a sheet metal plant at Lorong Perindustrian Bukit Minyak 11, with 70,684 sq ft built-up, bought in 2019
• China: a machining plant in Conghua, Guangzhou, where it has built four four-storey production blocks because the lease on its older plant ends in July 2032