Mercury Securities starts coverage of Cnergenz, target price at 66 sen

KUALA LUMPUR (July 18): Mercury Securities Sdn Bhd has initiated coverage of Cnergenz Bhd, with a “buy” recommendation at 47 sen, with a target price of 66 sen based on earnings per share of 3.8 sen forecast for the financial year ending Dec 31, 2023 (FY23) and peers' average price-earnings of 17.3 times.

In a note on Monday (July 18), the research house said it likes the stock for its attractive expansion plans and cheap valuations, well positioned to leverage the growing surface mount technology manufacturing solutions industry in Southeast Asia, which is forecasted by Providence to grow at a two-year compound annual growth rate of 8% from 2022 to 2024.

“The target price represents a potential return of 40% from the current price,” it said.

Mercury said Cnergenz had an order book of RM147 million as of May 31, 2022, expected to be fully recognised within the second half of 2022.

“Under the leadership of chief executive officer Lye Yhin Choy, who is responsible for the overall management and business operations of Cnergenz, the company was able to achieve a three-year revenue CAGR of 9% from FY18 to FY21 (excluding customer K & H for FY18 and FY19), despite the Covid-19 pandemic in FY20,” it said.

At 9.54am, Cnergenz had risen 3.16% or 1.5 sen to 49 sen, with 279,300 shares traded.