Maintain BUY on Feytech Holdings (FEYTECH) with an unchanged fair value ofRM1.32/share based on FY25F PE of 15x, on par with our KLCI target.
We met with Connie Go (CEO), Rachel Tan (CFO) and Chua Khe Gee (COO) recently. Key takeaways include:
➢ Management reiterated that operations are in line with their comments during the investor IPO presentations,
➢ 2QFY24 results (targeted in the 3rd week of August) will be clean without surprises, except for one-off listing expenses and management activities of RM3mil- RM4mil,
➢ 2QFY24 was a busy period with Kulim Plant 2 expansion, and trial runs of new product lineup,
➢ Delivered 450 sets of Omada 5 seats in 2QFY24. Management concedes that there might be volume impact from a premature rear axle failure, but unable to quantify,
➢ Delivered 455 initial sets of Peugeot 405 seats in 2QFY24. Steady state production should be ~200/month,
➢ Proton S70 had a very slow start but spooled up very quickly after its official launch. Initial demand is well ahead of expectations, FEYTECH has delivered ~3,000 sets as at end of Jun 2024,
➢ Received letter of award for KIA Sportage to manufacture the seat and seat covers. Target mass production in early-2025 with potential 5,000 units per year at stable run rates,
➢ Competitively bidding for Chery’s TIGGO 7, and looking at JAECOO J7 prospect, all are at the initial stage, and
➢ Stable operating cost with no major fluctuations. The diesel price hike will impact transportation expenses but should be immaterial as it is <1% of operating cost.
We forecast 2QFY24 net profit, excluding one-off costs, of RM14mil (+45% YoY, -17% QoQ). 1H is seasonally weaker period due to FEYTECH’S customers having factory shutdowns for the festive season while new model launches tend to be in 2H of the year.
FEYTECH is currently trading at 12.3x FY25 P/E, which is at a 14% discount to FBMKLCI.
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....