• Profile. VisDynamics (VIS) is listed in ACE market with market cap of RM49m. Share price surged 65% mom from RM0.27 to RM0.445 yesterday after delivering a strong FY16 results, supported by a net cash position of RM7.7m and speculation of dividend reward going forward. Similar to ViTrox, VIS is involved in semiconductor equipment market, supplying test equipment to OSATs.

• Overall, VIS secures sales from global leading electronics manufacturer (US) and memory player (S. Korea). The group is a beneficiary of strong USD: 99% sales for export while only 20% cost in foreign currency (US$, EUR, SG$, TWD and Rmb) mainly electronic parts such as motor, camera, pneumatic cylinders, etc.
   
• Positives largely priced in. VIS share prices rallied to a fresh 52-week high of RM0.47 yesterday before paring its gains to end 1.1% lower at RM0.445 on profit taking. Currently, VIS is trading at trailing P/E of 11x, lower than VITROX 15-16x P/E due to the latter’s bigger market cap (RM862m) and more established operating and dividend track record. Hence, we opine that the recent massive price surge has triggered concern about price sustainability, compounded by the steeply overbought (hourly/daily/weekly) indicators.
   
• From a technical perspective, we advocate Take Profit with as share prices are likely to retrace back by 5.6%-10% to RM0.40-0.42 support zones. A decisive breakdown below RM0.40 will trigger further decline towards RM0.37 (14-w SMA). On the flipside, any rebound will see upside capped at RM0.46-0.50 levels.

Source: Hong Leong Investment Bank Research - 10 Jan 2017