Transfer from ACE to Main board expected to take place before end of this year. Straight go into Top100 market cap. They're also working on M&A. I've bought some time back.
2Q20 results came in within expectations with 1H20 core earnings at 45%/47% of our/consensus’ FY20 estimates. We raise our FY20-22 earnings forecasts by 11-46% and TP by MYR3.80 to MYR7.20 (pegged to a re-rated 37x FY21E PER) on sizeable job win assumptions. Upgrade to BUY (from HOLD) as we believe GTT possesses large earnings growth
A niche automation specialist with core expertise in customisable capital equipment for solar photovoltaic industry.
Statistics
catalysts from its battery division while supported by stable orders from its solar division. GTT’s FY21E PER of 31x derives a PEG of only 0.6x.
Mainly lifted by new customers
2Q20 core net profit was MYR17.6m (-8% QoQ, +46% YoY) – taking 1H20 core earnings to MYR36.7m (+41% YoY). The strong growth of 2Q20 bottomline (YoY) was largely driven by: (i) GTT’s new customers, i.e. single automated equipment for its EV/battery-related products and medical devices; and (ii) some revenue improvements from solar divisions’ production line system and provision of parts and services.
Major shareholders: TAN ENG KEE Llh Holdings Sdn. Bhd. Kenanga Investors Bhd.
6.10/0.97 2.4 20.0 626 MYR3.8B USD910M
71.8% 3.2% 3.2%
Orderbook – From big to bigger
We note that GTT’s current orderbook is at a strong MYR295m (end-Jan 2020: MYR215m) where approx. MYR100m was contributed by its newly- secured production line system (PLS) order from its existing EV customer. We are positive on GTT’s first PLS order from this customer as it may pave the way for more job wins in the near-future. All in all, we raise our FY20-22 earnings estimates by 11/45/46% after mainly accounting for higher contributions from its new customers/segments (EV and medical devices; Figure 2) via sustained new job wins.
Raising TP on brighter earnings outlook
FY20E PER. The higher valuation is reflective of GTT’s sustained earnings from the solar division and strong earnings growth upsides from its new EV and medical devices customers. We also note that its plan for listing transfer into the Main Market in on track for 2020.
There many ways to look at PE. The higher the PE, the more expensive it is. PE being "too high" or "too expensive " is a relative concept. In other words, the PE figure is considered high if it is compared with PE in the past, the time before 5G was rolled out and life science was not as hot as now. Try to project the company's earnings in a few quarters into the future, you might notice that the PE is actually not that high. (In the world of stock investing, the future is more relevant than the past). And unlike glove stocks, the growth in Greatec is more sustainable and protected with an economic moat. The business is not subject to cut-throat competition as we will see in the glove industry in a few quarters.
Revenue and earning expected to increase in tandem with the increase in orderbook from rm235m to rm295m unless management decided to scale down rather than up.Eps is expected to reach 3-4sen/q in 2H20 with the current profit margin,yes?
Agree with Thelastone and Grova1. Don't just look at current PE. with double digit growth, ROE 28, excellent profit margin, with orderbook of 295 million, estimated eps next 2 Q is 3.5 to 4 sen per quarter. This will be even higher for 2021. Good prospects.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Jeju88
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Posted by Jeju88 > 2020-08-13 09:47 | Report Abuse
Mabel Meow Meow, your TP coming soon. What's next from your TP.