AmInvestment starts coverage on QES, fair value at 34 sen
KUALA LUMPUR: AmInvestment Research has initiated coverage on QES Group (QES) with a “buy” recommendation and a fair value of 34 sen a share based on FY19F PE of 15 times, representing a 42% upside.
To be conservative, the research unit attached a 20% discount to its peer average forward PE of 18.9 times to account for the group’s lower income base.
“With an impressive profit CAGR of 30% in the equipment manufacturing segment from FY14-FY18, QES has room for a rerating, more so with the market’s misconception that it is merely a distribution company,” it said in a report.
AmInvest Research said QES has three new products in the pipeline to drive its manufacturing segment. As these are fully automated equipment, they potentially command four times higher selling price compared with semi-automated ones while enjoying five to 10 percentage point higher gross profit margin.
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