In a recent virtual briefing, management has unveiled its orderbook target of RM1.1bn for 2024, which is 37.5% higher compared to this year. Apart from the repeat order for the solar segment, it aims to secure more contracts under the i) E-Mobility, ii) Life Science and iii) Semiconductor segments from new customers as well as new product offerings. In view of the robust orderbook, we raise our TP from RM5.03 to RM5.33 based on higher PE multiple of 35x (previously 33x) FY24F EPS. Maintain Neutral.

• 3QFY23 results review. During the quarter, the strong revenue sales growth, up 43.3% YoY, was mainly driven by Solar (+27.4%), E-Mobility (+131.5%), and new contribution from Life Science segment. Solar remains the largest contributor, accounting for 82.5% followed by EMobility (11.8%) and Life Science (5.7%).

• The current orderbook exceeded RM1bn. Out of the RM1.07bn orderbook, 59.7% comes from solar, followed by the E-Mobility segment (electric vehicle), 29.7%, and the Life Science segment made up 8.6%. YTD, solar segment has surpassed the target of RM400m with an additional gain of RM77m while E-Mobility and Life Science segments have reached more than 78% of their targets. About 70% of the existing orderbook will materialize in FY24F.

• Planning to expand capacity. In view of high capacity utilisation for its Batu Kawan IV plant in Penang, management has planned to acquire an additional 20 acres of landbank within the Greatech Batu Kawan 1 facility and also within Batu Kawan Industrial Park with a total estimated land cost of RM60m. The additional landbank is mainly catered for fabrication works like computer numerical control and metal jobs, as well as life science production lines. In the long term, management has also set its sights on establishing manufacturing plants overseas, namely, Costa Rica, Mexico (automotive), India (life science & automotive), and Germany (automotive).

• Targeting a stronger orderbook in FY24F. Management has targeted another RM1.1bn orderbook with Solar and E-mobility (Electric vehicle battery production pack and drive unit) contributing RM400m each, followed by Life Science (RM200m) and Semiconductor (RM100m). The group is confident to secure two new long-established US-based automotive customers for its E-Mobility segment and another 10 customers for the catheter, inhaler, pen injector, and glucose production lines under the life science segment. The results of the automotive tender contracts are expected to be known by May 2024. Lastly, it also expects to bag some virtual reality and artificial intelligence componentlevel production lines under the semiconductor segment.

Source: PublicInvest Research - 21 Nov 2023