AmInvestment Bank upgrades ViTrox to 'buy', raises fair value to RM9.89

TheEdge Fri, Apr 29, 2022 02:39pm - 1 year View Original


KUALA LUMPUR (April 29): AmInvestment Bank said on Friday (April 29) it had upgraded ViTrox Corp Bhd to "buy" from "hold" and revised up its fair value (FV) to RM9.89 from RM8.37 as it sees potential upside to the company's resilient business.

The research house said in a note that the FV is pegged at a revised financial year ending Dec 31, 2023 (FY23) forecast price-earnings (P/E) of 36 times, representing an adjusted three-year average forward P/E, from an earlier 33 times.

“We opine that ViTrox’s forward P/E of 36 times (versus 40 times over the past two years) is justifiable and view that there is further upside as the current weak sentiment in the technology sector offers an opportunity to accumulate the stock,” it said.

It also said its FY22 to FY23 earnings forecasts for ViTrox are unchanged, despite lower sales contributions expected from the machine vision system (MVS) for the second quarter ending June 30, 2022 (2QFY22) as guided by the management, as it believes the slower growth in China will be offset by other regions, particularly for the group’s automated board inspection (ABI) segment.

However, the research house raised its FY24 earnings forecast by 5% on the back of the group’s focus on manufacturing artificial intelligence (AI)-enabled machines to support higher average selling prices and margins.

AmInvestment Bank has also considered ViTrox’s capacity expansion, with the new facility to add 30,000 square feet of production floor space by the second half ending Dec 31, 2023 (2HFY23).

The research firm continues to like ViTrox for its attractive ABI and MVS product offerings, with a strong focus on developing AI capabilities.

Meanwhile, its V-ONE data analytic platform is expected to create a whole manufacturing ecosystem to attract new customers while retaining existing ones.

“Prospects are further enhanced by the group’s diversified sales in terms of geographical regions, and its continuous effort to reduce customers’ concentration,” AmInvestment Bank noted.

At Friday's noon break, ViTrox stood at RM7.59, higher by nine sen or 1.2%, valuing the group at RM6.99 billion. Year to date, the counter has fallen 22.87%.

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