ViTrox Corp (HOLD)

• ViTrox guided that 1Q12 will be worse than 4Q11 as sales volume continueto decline chiefly attributable to global economic uncertainty hinderingcustomers from investment on capital equipment.
• However, ViTrox believe that the decline in revenue has bottomed out inJan 12 and started to pick up in Feb and Mar in the form of spot orders rather thanbudgeted-recurring orders.
• However, ViTrox highlighted that ABI products are currently underintense price pressure from Taiwan-based TRI and new Chinese peers.
• Comments: ViTrox maybe proposing a finaldividend of 1 sen for FY11 in order to match 20% payout ratio as committed.
• Although not preferred by ViTrox, we think that leasing model maybe amore viable solution for customers during this difficult period while it alsocommands higher margins.
• SEMI estimated that semiconductor equipment spending to remain flat in2012 but would enjoy an optimistic growth of 17% in 2013.
• Our target price is revised downward to RM0.71 (from RM0.82 previously)based on DCF with a WACC of 13.4% and TG of 0%.