TT Vision Holdings Bhd (TTVHB: 0272) focuses on developing and manufacturing of machine vision equipment, providing related products and services which is integral for inspecting optoelectronics, solar cells, discrete components, and is utilized in vision-guided robotic systems. Backed by a strong orderbook, BUY with a TP of RM0.99 based on FY24F PE of 25x, in line with industry peers.

TTVHB is poised for exponential growth until 2025. The company is not only enhancing existing products but also driving innovation with the introduction of new offerings such as wafer AOI, AXI equipment, Solar Wafer Sorter, and Tandem Cell Photoluminescence (PL) Inspection Module. Furthermore, the submission of these new products for pioneer status may lead to substantial tax savings hence enhancing overall financial performance.

TTVHB strategically operates in high-growth sectors, supplying LED solutions for automotive, solar cells for PV, and discrete components for electric vehicles (EV) and consumer electronics. These sectors are anticipated to experience organic growth going forward. Notably, the automotive and solar PV industries are poised for steady expansion, aligning with global decarbonisation initiatives via the adoption of electric vehicles and solar energy.

TTVHB’s orderbook of RM72m as of 31 October 2023 translates to a comfortable 1.4x of FY22 revenue. We anticipate a sustained healthy order book replenishment rate, supported from improving demand for its automotive semiconductor sector, expected to commence in 4QFY23 or early next year.

As part of its growth strategy, TTVHB aims to continue expanding its footprint targeting the European market due to the Green Deal Industrial Plan and the USA's Inflation Reduction Act. Presently, TTVHB serve customers in China, Korea, Germany, the United States, and the Philippines. Notably, almost half of its RM72m order book is from overseas markets, underscoring the company's successful international expansion efforts.

As such, we forecast a strong FY24-FY25F earnings growth averaging around 34%, underpinned by a potent product pipeline, new market opportunities, and capitalising on highgrowth industries. The stock currently trades at an attractive FY24F PE of 21x, which is below Bursa Technology Index’s of 40x currently.

Source: Rakuten Research - 16 Nov 2023

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