Bursa Malaysia Stock Watch

Notion - OUTPERFORM call (CIMB)

kltrader
Publish date: Thu, 08 Apr 2010, 10:36 PM
kltrader
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We recently brought about 10 buy-side analysts and fund managers to visit Notion?s main factory in Klang. During the visit, investors were given an overview of the company as well its plans and the pipeline of order flows. The main takeaways from our plant visit were i) the potential new contract from Alphana appears to be all but locked up, ii) the company is acquiring a third factory, iii) 1Q10 looks fairly strong, iv) it has begun to supply other higher-value components to Samsung, v) demand remains strong, and vi) it is supplying more camera parts. We adjust our FY10-12 earnings up 2-4% as we incorporate more revenue from the camera side and higher margins due to the internal consumption of scrap and in-house plating process. This raises our target price from RM4.32 to RM4.46, which we continue to peg to a 20% discount to its global peers. We reiterate our OUTPERFORM call on the potential re-rating catalysts of i) new customers, ii) production of new, higher value-added parts, iii) scope for margin expansion, iv) supply of multi-components to a wider audience and v) any M&A activity.
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