​The lapsing of Memorandum of Understanding or MOU for short for Genetec on 8th July; doesn’t seem to weight much for investors, as the share price is now considerably low.

​And to recap, Genetec had signed the MOU with the Thai giant, Asia Precision Public Company Limited (APCS) back on 11thJanuary, to collaborate and jointly develop a factory automation for energy storage system in Thailand.

​Bear in mind that Thailand is somewhat equivalent to Detroit in Asia as the automotive industry had been significant for the region. Hence, the MOU is somewhat crucial to the company’s future development as EV is still new in Thailand even to-date.

​​As for those who done their homework, you can easily find the traction of Energy Absolute – one of the few big clienteles for APCS, is aiming to develop 1GWh to 4GWh of power infrastructure in Thailand.

​​By partnering with APCS, Genetec used to be one of the few front runners in the mega projects.

​​But why does investors seemingly unfazed by the lapse of MOU?
​​There could be quite a number of explanations – first, the valuation of Genetec had backed-down from 3 digits to a humble 23 times PE now. Apart from macro factors that devalued most, if not all tech related companies in Bursa, investors’ expectation has toned down quite a fair bit, hence there were minimal reaction by the public investors.

​​On the institutional investors’ end however, one good friend of mine who is in the fund management industry had shared that Genetec is going for low hanging fruit that could yield quicker, and it’s something more impressive to be brought commercially to the market.

​​The regenerative braking system.

​​In short, the braking system allows recycle of kinetic energy generated during a vehicles’ braking. The system would greatly help with the current scarce in mileage range available of EVs.

​​You may refer to the video below for more information.

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https://www.youtube.com/watch?v=CYwptIkKEbE...

​​That being said, valuation is still an art rather than science. Make yourself comfortable in positioning your capital into Genetec at a valuation you find “reasonable”. But for me, Genetec is definitely a darling for at least the next 3 years in Bursa. RM3.50 is not hard to achieve!

​​Cheers.

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