Linkers Industries Ltd

Linkers Industries Limited operates in the electrical wire harness and cable assembly manufacturing industry, serving the global home appliances, industrial products and automotive industries. The demand for the company's products is highly correlated with the trend and development of these end markets, which fluctuate over time with economic cycles. The industry is characterized by rapid technological change, new product development, rapid product obsolescence, evolving industry standards and significant price erosion over the life of a product. The entry barrier is low, and competition is based on product functionality, quality and reliability, design, technical and manufacturing capabilities, ability to meet customers' delivery schedules, customer relationships and services, and product price. The company's sales are made mainly to customers located in the Asia Pacific Region, and it generates a significant amount of export sales. The Malaysian economy registered modest growth of approximately 3.1% in 2021 ¹ after a contraction of 5.6% in 2020 ², according to the Department of Statistics Malaysia.

The company faces significant competition from numerous existing and potential competitors, many of which may have significantly greater financial, manufacturing, sales, marketing and other resources. The company competes primarily on product functionality, quality and reliability, design, technical and manufacturing capabilities, ability to meet customers' delivery schedules, customer relationships and services, and product price. The company's competitive position is supported by its quality control procedures, under which products are inspected and tested for quality by quality control personnel in accordance with internal procedures, and by its manufacturing capabilities, including automated cutting, stripping and crimping machines. The company's revenue is highly concentrated, with revenue generated from its top five customers accounting for 84.5% ³, 89.4% ⁴ and 86.2% ⁵ of total revenue for the years ended June 30, 2026, 2025 and 2024, respectively.

Linkers Industries Limited is a BVI holding company that generates revenue through the manufacture and sale of electrical wire harnesses and cable assemblies through its operating subsidiary, TEM Electronics (M) Sdn. Bhd., a company established in Malaysia. The company's revenue is transactional, generated on an order-by-order basis from customers, with no long-term agreements with any of its top five customers. The company's primary customer segments are in the home appliances, industrial products and automotive industries, with sales made mainly to customers located in the Asia Pacific Region. The company relies on third-party suppliers for its raw materials requirements and does not enter into any long-term contracts with them. The principal types of raw materials used in manufacturing consist of silicon and polyvinyl chloride wires, plastic materials, connectors, terminals and various other components such as relays, timers and thermistors.

The company's product line consists of electrical wire harnesses and cable assemblies, which are manufactured at its production facility, the Malaysia Factory, located in Kedah Darul Aman, Malaysia. The company's production processes include assembly of parts and components, which are labor intensive, and the use of various machinery and equipment, including automated cutting, stripping and crimping machines. The company's products are subject to industry standards set by various authorities and organizations, including the European Union and international standards on the use of chemicals and raw materials, such as the Restriction of Hazardous Substances Directive, as well as the specifications required by its customers. The company's products are inspected and tested for quality by its quality control personnel in accordance with its internal procedures.

The company's products are required to meet industry standards or governmental safety requirements, and its customers place significant emphasis on product quality and reliability in selecting their suppliers. The company's products are subject to industry standards set by various authorities and organizations, including the European Union and international standards on the use of chemicals and raw materials, such as the Restriction of Hazardous Substances Directive, as well as the specifications required by its customers. The company is required to meet product safety and other requirements imposed by the relevant government authorities in countries that its products or the end-products of its customers are sold to.

During the fiscal year ended June 30, 2026, the company operated through its subsidiaries, including Linkers Asia Pacific Limited, a direct wholly-owned subsidiary, Linkers Hong Kong Limited, a direct wholly-owned subsidiary of LAPL, TEM SP Limited, a direct wholly-owned subsidiary, and TEM Electronics (M) Sdn. Bhd., a direct wholly-owned subsidiary of TSPL and an indirect wholly-owned subsidiary of the company. The company also holds an interest in LPW Electronics Co Limited, a company incorporated in Thailand, which is an associate of LAPL. The company's Class A Ordinary Shares are listed on The Nasdaq Capital Market under the symbol LNKS. As of June 30, 2026, the company had 1,771,351 Ordinary Shares issued and outstanding, including 1,521,351 Class A Ordinary Shares and 250,000 Class B Ordinary Shares ⁶. The company's Controlling Shareholder, Mr. Man Tak Lau, beneficially owns an aggregate of 273,318 Ordinary Shares, including 23,318 Class A Ordinary Shares and 250,000 Class B Ordinary Shares, representing 15.43% ⁷ of the total issued and outstanding Ordinary Shares and 77.03% ⁸ of the total voting power.

The company's financial performance for the fiscal year ended June 30, 2026, reflects the trajectory of its business as a manufacturer of electrical wire harnesses and cable assemblies. The company's revenue is highly concentrated among a limited number of major customers, with revenue from its top five customers accounting for 84.5% of total revenue for the year ended June 30, 2026, compared to 89.4% for the year ended June 30, 2025, and 86.2% for the year ended June 30, 2024. The company's business is dependent on the continued and uninterrupted performance of its production facility, and it relies on third-party suppliers for its raw materials requirements without long-term contracts. The company's future capital requirements may be substantial as it seeks to expand its operations and production capacity, including purchasing new machinery and equipment.

The company's growth strategy is focused on expanding its operations and production capacity, including purchasing new machinery and equipment. The company uses various machinery and equipment, including automated cutting, stripping and crimping machines, in its production facility. The company's future capital requirements may be substantial as it seeks to expand its operations and production capacity. There is no assurance that the company will have adequate internal and external resources to fund its future capital requirements, and it may from time to time need to raise additional funds to meet such capital requirements. Any equity or debt financing, if available at all, may be on terms that are not favorable to the company. A large amount of bank borrowings and other debts may result in a significant increase in interest expenses while at the same time exposing the company to increased interest rate risks. Equity financings could result in dilution to the shareholding of the company's shareholders, and the securities issued in future financings may have rights, preferences and privileges that are senior to those of its Shares.

The company's growth is also dependent on its ability to develop, manufacture and introduce new and technologically enhanced products that meet its customers' requirements consistently. The markets for the company's products are characterized by rapid changes caused by the frequent emergence of new technologies. This requires the company to anticipate and respond rapidly to changes in industry standards and customer needs and to develop, manufacture and introduce new and enhanced products on a timely and cost effective basis. Failure to anticipate and respond to customers' changing needs and emerging technological trends timely and accurately, to develop, manufacture and introduce products that meet the evolving needs of its customers could adversely affect the company's relationships with its customers, thus resulting in loss of market share.

The company's margin and cost outlook is subject to fluctuations in the prices of its major raw materials. Some of the company's raw materials are subject to price volatility as a result of changes in levels of global demand, supply disruptions, political influence on trade, fluctuation on import duties, extended/uncertainties in lead time and other factors. In particular, connectors and terminals, which constitute a large portion of the company's raw materials requirements, are made of metal and plastic that are considered as commodities. If there is an increase in the prices of copper, wires, terminals, connectors, plastic materials and other raw materials that the company requires for its production, it may not be able to shift such corresponding price increase to its customers in a timely manner, and this may have a material and adverse effect on its business, financial conditions and results of operations. The company's production processes are labor intensive, and it may be required to increase the wages of its workers as a result of changes in the labor market conditions or industry practices or minimum wage requirements or otherwise.

The company's operational outlook is dependent on the continued and uninterrupted performance of its production facility. The company's production facility is subject to operating risks, including equipment failures, failures to comply with applicable regulations, disruptions in power supply, industrial accidents, labor shortages, strike, fire, earthquake or other natural calamities, and acts of sabotage. If any unanticipated or prolonged interruption of operations at the production facility occurs, the company may not be able to deliver its products to its customers in a timely manner or at all. The company relies on third-party suppliers to meet its raw materials requirements and does not enter into any long-term contracts with them. The terms of services provided by the company's suppliers may be susceptible to fluctuations with regard to pricing, timing and quality. The company's production facility, offices and warehouses are presently located on leased premises, and at the end of each lease term, the company may not be able to negotiate an extension of the lease and may therefore be forced to move to a different location, or the rent it pays may increase significantly.

The company's capital allocation priorities include funding its manufacturing business and other corporate purposes. The company anticipates that it will use the net proceeds from its IPO for its manufacturing business and other corporate purposes. The company has not determined a specific use for a portion of the net proceeds of its IPO now earmarked for working capital and other general corporate purposes, and its management will have considerable discretion in deciding how to apply these proceeds. The company currently intends to retain any future earnings to finance the operation and expansion of its business, and it does not expect to declare or pay any dividends in the foreseeable future. Under BVI law, the company may only pay dividends if it will, immediately after the payment of dividend, satisfy the solvency test (i.e. the value of its assets exceeds its liabilities and it is able to pay its debts as they fall due).

The company faces structural headwinds and execution risks to its growth plan, including the risk that the economy in general may not grow as quickly as expected. The company's business and prospects depend on the continuing development of the international economy, with its sales to customers located mainly in the Asia Pacific Region. There is no assurance that the Asia Pacific region economy will continue to grow at the same pace as in the past. In the event that the Asia Pacific region economy suffers, demand for the products the company currently offers may diminish, which would in turn result in decreased likelihood of profitability. The company's business is highly correlated with the trend and development of the global home appliances, industrial products and automotive industries. If the global demand for products in such industries falls as a result of adverse economic cycles, the demand for the company's products may also fall.

The company is also subject to geographic, regulatory and macro factors that could constrain its growth. The company's operations are subject to various laws and regulations in Malaysia, including regulations on business licenses, intellectual property rights, employment, personal data and privacy, dividends, unmanned aircraft, distribution trade services and cybersecurity. Certain registrations, certificates and/or licenses for the conduct of the company's business are required under these laws. Based on the company's experience, some of the laws and regulations of the place where it operates its business are subject to amendments, uncertainty in interpretation and administrative actions from time to time. Any failure to comply with these laws and regulations may give rise to fines, administrative penalties and/or prosecution against the company, which may adversely affect its reputation, financial condition or results of operation. The company is also exposed to fluctuations in the value of the RM, and it does not take actions to hedge against foreign exchange and transaction risks. The ability of the company's subsidiaries to pay dividends or make other payments to it may be restricted by the foreign exchange control policies in the countries where it operates.

The company's revenue is highly concentrated among a limited number of major customers, with revenue from its top five customers accounting for 84.5% , 89.4% and 86.2% of total revenue for the years ended June 30, 2026, 2025 and 2024, respectively. The company does not have long-term agreements with any of its top five customers, and their purchases are made on an order-by-order basis. The company relies on third-party suppliers to meet its raw materials requirements and does not enter into any long-term contracts with them, exposing it to fluctuations in pricing, timing and quality. The company's business is dependent on the continued and uninterrupted performance of its production facility, which is subject to operating risks including equipment failures, disruptions in power supply, industrial accidents, labor shortages, strike, fire, earthquake or other natural calamities. The company is exposed to fluctuations in the value of the RM and does not take actions to hedge against foreign exchange and transaction risks. The company's future capital requirements may be substantial as it seeks to expand its operations and production capacity, and any equity or debt financing, if available at all, may be on terms that are not favorable to the company.

Management's message to shareholders emphasizes the company's focus on navigating a competitive industry characterized by rapid technological change, evolving industry standards and significant price erosion, while managing a concentrated customer base and a reliance on third-party suppliers. The company's strategic priorities for the period ahead center on expanding its operations and production capacity, including purchasing new machinery and equipment, developing and introducing new and technologically enhanced products that meet customer requirements, and managing its raw material and labor costs. Management has highlighted the company's dependence on the continued and uninterrupted performance of its production facility and its reliance on dividends and other distributions from its subsidiaries to fund its cash and financing requirements. The company currently intends to retain any future earnings to finance the operation and expansion of its business, and it does not expect to declare or pay any dividends in the foreseeable future. Management has also noted that the company's future capital requirements may be substantial as it seeks to expand its operations and production capacity, and that any equity or debt financing, if available at all, may be on terms that are not favorable to the company.