Stock Name: VITROX
Company Name: VITROX CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: Vision inspection equipment maker Vitrox Corp Bhd's share price resumed its upward momentum, surging 11 sen to RM1.25 on Thursday, Sept 23 following a positive report by CIMB Equities Research.

At midday, it was up 11 sen to RM1.25 with 153,900 shares done.

The share price surged from 76.5 sen on Aug 13 to a high of RM1.41 on Aug 30 and it slipped to'' RM1.14 on Sept 22.

CIMB Research said Vitrox was 'on the cusp of explosive growth', having successfully executed its business re-engineering'.

'It is well-placed to tap into the vast revenue opportunity of US$1 billion to US$1.2 billion per annum presented by its new area of manufacture as it rides on its association with Agilent. Vitrox will benefit from Agilent's TECHNOLOGY [], channel partners, supply chain and outsourcing, and shorter product development cycle,' it said.

CIMB Research said the key drivers are:

i) its takeover of Agilent's market share for automated optical inspection (AOI) and automated X-ray inspection (AXI) machines.

ii) the drive towards more automated vision inspection,

iii) a wider product offering, and

iv) margin expansion possibilities.

'Vitrox is trading at 5.5 x FY11 P/E, a 25% discount to its peers due to its smaller market cap, lower ROE and dividend yield. If we were to apply a 20-30% P/E discount to its peers on FY12 EPS to factor in execution risks, potential shortfall in market share targets and Vitrox's smaller size, we would arrive at a valuation of RM1.83-RM2.09, which offers upside of 61-83% from current levels,' it said.

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