• Company profile . GUH Group is involved in three (3) divisions of business namely, a) electronic division, which engaged in the manufacture and sales of printed circuit boards (PCBs) catering to communication, audio and video, computer, automotive, home appliance and other consumer products, b) properties division and c) utilities division – mainly involved in water/wastewater solutions.

• Riding the IoT wave. We saw an improvement of 10.4% in the FY2016 revenue at RM315.2m supported by electronic (+10.6%) and utilities (+27.0%) division. Meanwhile, FY2016 PBT and PAT grew 24.3% yoy and 90.1% yoy respectively. The said gains were underpinned by improved contribution from Malaysia operation on higher revenue, coupled with forex gains in FY2016. Riding on the upcoming Internet of Things (IoT) wave, we can expect higher contributions from the PCB manufacturing division with the increasing use wearable device, augmented reality heads-up display, car audio, automotive electronics, and home appliance.

• Investments merits. GUH Group has net cash per share of RM0.37, and is trading at a discount below its book value of RM1.99. Should there be a turnaround of its utilities division in FY2017, we expect more contribution towards its bottom line.

• Technical outlook. GUH has turned into an uptrend position after surging above the SMA200 on the daily chart. With the gap-up candle yesterday, we expect further follow-through buying interest to pick up over the near term, targeting the RM0.94-0.98, followed by RM1.03. Support will be located around RM0.895-0.88, while cut loss at RM0.86

Source: Hong Leong Investment Bank Research - 21 Mar 2017