Think of Malaysian listed VS Industry Bhd, and what comes to mind?

Why, this electronic manufacturing service (EMS) provider manufactures sophisticated hair dryers, coffee machines, robotic pool cleaners, cordless vacuum cleaners and many more innovative appliances.

These are just some of the household electrical and electronic products that VS Industry produces like clockwork in its 16 factories in Malaysia, China, Indonesia and Vietnam where it employs some 12,000 people.

Together with its Hong Kong-listed subsidiary, V.S. International Group Limited, the group offers one-stop manufacturing solutions to world-renowned customers from Europe, Japan and the United States.

Over the last five years though, VS' net earnings have been choppy, on the back of a lack of diversity in its client base.

For its financial year ended July 31, the company recorded a 30 percent dip in net profit to RM115.86 million ($28.4 million) on the back of an 18.5 percent drop in revenue to RM3.24billion.

Thus it was rather surprising that VS' share price has been stubbornly skyrocketing instead.

 If we were to compare VS' share price from March 20 of 63.5sen, (which was at the height of the COVID-19 pandemic and on the day markets hit their lows), VS is now up some 300 percent as of its last traded price of RM2.34.

Datuk Beh Kim Leng, executive chairman of VS Industry Bhd

So why are investors excited over VS' growth despite the lower profits? After years of ups and downs, are we about to see more consistent growth?

Its Executive Chairman Datuk Beh Kim Leng sees the glory days of VS looming, and is excited about the company surpassing its peak performance in recent years.

"We are a beneficiary of the US-China trade war. We have felt it since last year, based on the orders and enquiries we have been receiving. We can feel the growth coming," said Beh.

"We have been putting the building blocks in order. Since last year, we have secured a few new sizeable clients, hence giving us a more diversified base,"  

So how did VS establish itself as a leading integrated EMS provider in the region with a market cap of some RM4.7 billion?

How was it able to undertake the manufacturing needs of global brand names for office and household electrical and electronic products?

Well, like most big companies, its roots were humble.

Its founder is its executive chairman, 63-year-old Beh, who started the company by chance when he was a young technician back in the seventies.

The year was 1976, and then 19-year-old Beh had just gotten married. The Malaysian economy had yet to take off and putting food on the table was a daily battle.

Like most Malaysian Chinese during that era, Beh went to Singapore in search of better prospects. Armed with a determination to secure a job and some basic vocational skills, Beh managed to secure a job as a plastic moulding technician.

Within two years, Beh had familiarized himself with the processes involved, particularly in the segment of video tapes.

He noticed that demand for this segment was almost constant. He began to wonder whether he should in fact start his own business.

Deciding to take a chance, Beh approached one of the regular vendors he had serviced for a job.

To his surprise, he was given the contract. Armed with this sole contract to manufacture cassettes and video tape parts in Singapore, Beh formed VS Industry Pte Ltd in Singapore.

"The name VS stood simply for 'Video Specialist', because that was the only sort of manufacturing I knew how to do then," Beh laughs.

The young Beh successfully completed his first contract, and to his surprise, got a second order from the vendor.

Before long, VS was getting larger repeat orders from a variety of vendors, and Beh could foresee that this could be a sizable and sustainable business.

Beh decided to take the plunge and relocate his entire business operations from Singapore to Johor Bahru, Malaysia.

Together with his wife and brother-in-law Datuk Gan Sem Yam, Beh formed VS Industry Sdn Bhd in 1982.

With a lower cost base, Beh was able to diversify VS' offerings into other fields. What Beh had was his ability to manufacture a product from A-Z.

This made his services very sought after, and it wasn't long before VS was offering extensive manufacturing services which included plastic injection mould design and fabrication, injection moulding and finishing processes, printed circuit boards assembly, full box-built assembly, packaging and logistics.

As its size and reputation grew, Beh felt that the company needed a listing status for credibility and corporate governance purposes.

The company was listed in 1998 on the main market of Bursa Malaysia at an IPO price of RM1.90.

After listing, growth was so rapid that it set up a manufacturing facility in Shenzhen, China. The operations were undertaken by its Hong Kong subsidiary. Before long, VS had expanded its manufacturing facilities in Qingdao and Zhuhai in China, and Hanoi in Vietnam.

These were placed under its Hong Kong subsidiary, V.S International Group Ltd, which were also subsequently listed in Hong Kong in 2002.

"Our principles were simple. Always stay competitive and always stay cost effective. Failure is not allowed. This is our commitment to our customers," says Beh.

For his staff, Beh's criteria were simple – don’t be lazy and don't make excuses.

"If I am scolding the staff, it is because I feel there is hope and they can be improved. They are useful. So you should be happy if the boss is scolding you," says Beh.

Meanwhile, as its international market started to grow, European clients started to reach out.

VS' one-stop manufacturing solutions and its ability to keep costs low was something few could replicate elsewhere.

So not surprisingly, VS was ranked alongside the world's top 50 global EMS providers for thirteen consecutive years from 2007 to 2019.

"With the VS platform, we are able to take care of our 12,000 staff and their families. Our policy is to be generous with dividends and our ESOS option to staff," says Beh.

"I do not mind being diluted, as long as the company is able to grow," says Beh, his family currently owns a direct 18.39 percent stake in VS.

VS has a 40 percent dividend payout ratio and typically pays dividends every quarter.  

Today at 63 years of age, Beh's vision is more for succession planning and to ensure VS is able to sustainably grow over the next 20 years.

"I don't have an office in VS anymore! I just go to chit chat with the staff. If I am still needed to make decisions, then VS is in trouble!" jokes Beh.

The writer was with the Malaysia Star, an ANN member.