LOCAL elevator manufacturer EITA Resources Bhd is accelerating the use of technology and articial intelligence (AI) in its lifts to widen their market appeal amid the Covid-19 pandemic.

EITA’s solution involves just a few taps of one’s smartphone to send the lift up or down. It is working on new technologies such as this as an added convenience and to alleviate the sense of fear that some people may have about touching lift buttons.

As it is the only full-fledged local lift manufacturer, group managing director Fu Wing Hoong believes the company needs to differentiate itself from its foreign counterparts, which tend to be better known in the market.

“Being a new player in the market, it is difficult for us to compete in terms of branding, even if we have better equipment,” Fu tells The Edge.

As such, he believes the elevator manufacturer should compete in areas in which it can do its best, such as incorporating new technologies in its elevators, which may help elevate the EITA-Schneider brand name.

Having embraced AI and the Internet-of-Things (IoT), EITA is working on its remote monitoring of elevators in real time for better service response, which would allow technicians to be dispatched to fix or maintain lifts before they break down.

There are more than 30 of these “modernised” lifts already available at nine job sites, although he notes the technology is still at a preliminary stage.

Its research and development team has also come up with IoT lift sensors, which can monitor the performance of an elevator or escalator for predictive and preventive maintenance.

On top of this, add facial recognition, which Fu ties back to AI and security of the future. Based on facial recognition, elevators will have a destination dispatch system integrated.

“Of course, these are not new technologies, but we would like to be in the forefront in terms of application. Now, this is where we have to work hard and also re-strategise in some of the areas in the market that have better potential.”

The new tech lifts are expected to give EITA a competitive advantage in securing new maintenance jobs in the market and to provide recurring income.

Since its inception in 1996 until January this year, the company has handed over 3,567 lifts and is maintaining 2,939 units.

Fu says modernising the lifts will increase the profit margin from the maintenance segment, which boasted a gross profit margin of 35.1% as at Dec 31, 2020.

Embracing Covid-19 as part of operational norm

Tech innovations brought about by the pandemic aside, Covid-19 did have a negative impact on EITA as well, as its business hinges in part on the hard-hit construction industry.

Fu says all businesses and project delivery, except for the lift maintenance segment, were halted during the first phase of the Movement Control Order (MCO) in mid-March last year.

But the lift maintenance business contributed only about 10% of earnings during the period.

Given the circumstances, EITA performed reasonably in FY2020, registering a 17% year-on-year drop in net profit to RM17.29 million, from RM20.83 million, while revenue slipped 6.9% y-o-y to RM284.22 million, from RM305.39 million.

Even though Fu acknowledges it could be another two years before the construction industry picks up, he is optimistic about EITA’s prospects.

There may be fewer new buildings, but there will still be jobs.

By being more effective, Fu expects not only to get a fair share of the jobs, but to exceed it.

“We’d rather look at it positively, as we also don’t believe this Covid-19 situation will end tomorrow. This is the new norm. We accept that Covid-19 is part and parcel of the operational norm … as part of the operational cost.”

Barring unforeseen circumstances, Fu expects growth in earnings performance in the financial year ending Sept 30, 2021 (FY2021), driven by the elevator business and power substation jobs.

For the first quarter of FY2021, EITA’s net profit was flat at RM6.03 million, while revenue slipped 5.5% y-o-y to RM66.15 million, from RM70.02 million.

Fu says the company’s order book stood at RM393.47 million as at Dec 31, 2020, from RM492.3 million a year earlier.

Giving an update on the project delivery of the Light Rail Transit 3, he says EITA aims to speed up delivery and complete the job by 2022. The company expects a more “significant contribution” from the LRT3 project this year.

As for the Mass Rapid Transit 2 project, EITA has yet to do the testing, commissioning and handover and inspection, as most of the billings have been recognised.

CGS-CIMB Research analyst Kamarul Anwar, the only analyst covering the stock, has projected a net profit of RM21.86 million in FY2021 and RM25.69 million in FY2022. Reve­nue is estimated at RM318.3 million in FY2021 and RM351.8 million in FY2022.

Kamarul has a “buy” call on EITA, with a target price of RM2.08, implying a headroom of 129% from last Wednesday’s closing price of 91 sen. EITA has a market capitalisation of RM236.6 million.

The counter, which gained 72% from 53 sen over the past year, saw its share price peak at RM1.80 in January — tripling in a mere three months ­— following a one-for-one bonus issue with free warrants. However, the decline was just as swift.

Shortage of skilled technicians an opportunity

Now recognised as a leader in the industry, EITA is training its competitors’ technicians as well.

Fu notes that the shortage of skilled technicians in the market provides EITA with an opportunity to build a better image for the company.

“Being in a regulated industry, without this CP3 (Competent Person Grade 3) certificate, you cannot inspect or maintain the lifts,” says Fu, adding that the government recognises only those qualified to provide these services.

He believes the training school will eventually be a significant new income stream for EITA.