We remain positive on Powerwell Holdings Bhd’s (“Powerwell”) earnings visibility given its solid orderbook and healthy balance sheet with net cash position. We expect demand for Powerwell’s electricity distribution products to pick up along with construction activities especially from the imminent revival of mega infrastructure projects. Recommend BUY with target price of RM0.33 based on 13.7x PER FY21 as per the Bursa Malaysia Industrial Production Index.
Backed by a solid track record of over 25 years, Powerwell is principally involved in the design, manufacturing and trading of electricity distribution products, predominantly low voltage (“LV”) switchboards and medium voltage (“MV”) switchgears. Products are mainly supplied to main contractors, mechanical and electrical contractors, and EPCC companies across various industries. Powerwell’s near term earnings visibility is well supported by an orderbook of RM67m. We expect job flows to enhance due to potential roll out of infrastructure projects as the electricity distribution industry is highly correlated with construction activities.
Powerwell is the only local company authorised by Siemens, a German conglomerate to manufacture and sell LV switchboards and MV switchgears in Malaysia as well as an authorised switchboards manufacturer and seller of world’s leading electrical equipment brand, Schneider in Malaysia. More than 80% of revenue is contributed by local market while its internationally certified products further strengthen their presence in regional markets such as Indonesia and Vietnam.
To recap, Powerwell which made its debut on ACE Market in Jan this year plans to develop its own ““Powerwell” branded MV switchgear where preparation has started in May 2018. Moving forward, more products are also set to be IEC standards certified to increase product marketability.
Powerwell’s balance sheet is healthy sitting on net cash of RM10.4m with gearing ratio of 0.10x. Net profit is expected to register double-digit growth of over 20% over the next 2 years supported by solid orderbook and anticipation of higher job orders.
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....
joni
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Posted by joni > 2020-05-22 10:51 | Report Abuse
hold. today can break 0.31 breakout to higher 0.325