TT Vision Holdings Berhad (TTVHB - Stock code 0272), will be making its debut on the ACE Market today following its voluntary delisting on the LEAP Market. Through its subsidiaries, the Penang based group is primarily involved in the development and manufacturing of machine vision equipment and provision of related products and services within the semiconductor industry. The machine vision equipment offers to serve the inspection of optoelectronics, solar cells, discrete components and integrated circuits (ICs). Underpinned by the optimism on China’s reopening coupled with mass adoption on industrial automation, we anticipate its net earnings to attain RM14m and RM15m for FY23 and FY24 respectively. BUY with a TP of RM0.50 based on 20x PER over FY23 EPS, a slight discount to its listed peers on Bursa Malaysia due to smaller market capitalisation.
TTVHB has a proven track record of 20 years in the manufacturing of machine vision equipment, where it started with the manufacture of vision inspection, then expanded to multiple vision inspection equipped with processing and multifunctional features. In FY19 to FY21, the company achieved a CAGR of 51.25% in revenue. As at 30 Nov 2022, the group has secured outstanding order book totaling RM20.8m.
Geographically, the group’s principal markets are Malaysia and China, contributed 24% and 73% respectively to group’s revenue for FYE22. Major customers of TTVHB are Maxeon group, Hanwha Malaysia, and Inari Technology SB, some of which TTVHB has long standing business relationship spanning over 18 years. Meanwhile, serving these major customers would provide future reference for TTVHB to cater for new orders and prospective new customers. Alongside a stronger demand from China, we believe there is more room for TTVHB’s Wire Bond AOI machine orderbook to grow.
The key strength of TTVHB includes its R&D capabilities to innovate and develop products alongside IT protection, which will allow TTVHB to maintain its competitiveness in this ever evolving industry. The R&D efforts have successfully helped to obtain 2 utility innovation patents valid up to 2031. The group plans to utilize RM8m of the IPO proceeds to strengthen its R&D capacity by purchasing tools, equipment and software as well as expanding R&D’s human capital moving forward. Hence, we expect the stickiness between TTVHB and its customers to increase within the semiconductor industry that is subjected to rapid changes in technology.
Post listing, its gearing ratio will narrow from 0.15x to 0.03x. The company has no dividend policy at this juncture.
Source: Rakuten Research - 18 Jan 2023
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