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Technical Tracker - Technical Tracker - HLIB Retail Research –08 Jan 2025

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Publish date: Wed, 08 Jan 2025, 11:02 AM
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This blog publishes research reports from Hong Leong Investment Bank

Notion: Pending breakout

We anticipate FY25 to be a year of earnings growth for Notion, driven by several key factors:

EMS. EMS is expected to be the major growth driver for FY25, primarily due to the continued ramp-up in the motor component business. Following the successful mass production of the motor casing for Customer D’s haircare products, the group is now in the process of mass-producing two additional motor components. On top of that, the group is targeting larger motor components used in Customer D’s vacuum cleaners, aiming to secure all three parts. If successful, along with the mass production of two additional motor components, this could boost EMS revenue by an additional 25-30%.

Automotive. Automotive segment is poised for stronger performance in FY25, driven by two key factors: (i) the commencement of two new projects; and (ii) increased orders from its largest customer. The group will begin supplying solenoid valves to a South Korean client and car sensor mounts to a Vietnamese client associated with a prominent EV manufacturer in early 2025. These new projects are expected to contribute approximately RM2m and RM1.5m in monthly sales respectively. Meanwhile, management is conservatively projecting single-digit growth in sales from its largest automotive customer, citing the ongoing downsizing trends among European automakers.

HDD. The HDD segment is expected to deliver stronger performance, primarily driven by capacity expansion in spacer line. In the near term, Notion is focusing on R&D to develop stainless steel disk clamps and glass spacers. This initiative addresses the limitations of aluminium components, which can only support HDD capacities of up to 40TB — just marginally higher than the current market maximum of 32TB.

Pending breakout. Notion is pending for a breakout above its immediate resistance region of RM1.42-1.45, with indicators showing uptick bias. A successful breakout above the said hurdle will spur greater upside toward RM1.59-1.65-1.75 levels. Cut loss at RM1.18.

Collection range RM1.26-1.30-1.35

Upside targets: RM1.59-1.65-1.75

Cut loss: RM1.18

Source: Hong Leong Investment Bank Research - 8 Jan 2025

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