KUALA LUMPUR (Jan 30): With more international semiconductor companies expected to relocate their production capacity to Malaysia, PublicInvest Research has upgraded ACE Market-listed ECA Integrated Solution Bhd to “outperform”, with a higher target price (TP) of RM1.12 from 73 sen previously.

Following a meeting with ECA Integrated’s management, the research house said the automated manufacturing solution provider is optimistic about doubling its top line for the financial year ending Oct 31, 2023 (FY2023) in anticipation of more stand-alone equipment orders to be secured from existing and new customers.

PublicInvest said this comes as more international semiconductor companies relocate their production capacity to Malaysia in view of heightening tensions between China and the US, especially on the technology front.

“We raise our FY2023-25 EPS (earnings per share) forecasts by 38% to 40%, and upgrade our call from 'neutral' to 'outperform', with a higher TP of RM1.12 (previously 73 sen), based on revised 35 times FY2024 EPS,” PublicInvest said in a note on Monday (Jan 30).

For the fourth quarter ended Oct 31, 2022, ECA Integrated posted a net profit of RM2.97 million on a revenue of RM7.86 million. There are no comparative figures, as this is the company’s second condensed interim financial report announced in compliance with Bursa Malaysia’s ACE Market listing requirements.

Meanwhile, for the full year, the company’s net profit declined 4.53% to RM7.81 million from RM8.18 million last year, mainly due to higher employee compensation and benefits expenses arising from an increased employee headcount.

This was despite full-year revenue rising 34.22% to RM27.53 million from RM20.51 million for FY2021, on the back of its manufacturing division’s contribution, mainly from the provision of integrated production systems and stand-alone automated equipment.

ECA Integrated noted that the company's bottom line was also affected by higher administrative expenses, due to gradual resumption of advertising and marketing activities after the easing of Covid-19 related travel restrictions and non-recurring expenses incurred in relation to the listing exercise.

At 10.54am, shares in ECA Integrated were down 3.5 sen or 3.43% to 98.5 sen each, giving the company a market capitalisation of RM568.8 million.

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