KUALA LUMPUR (June 13): AffinHwang Capital Research has maintained its “Buy” rating on KESM Industries Bhd at RM15.02 with a higher target price of RM21.80 (from RM16.40) and said KESM recently delivered a strong 9MFY17 results with earnings up 39% year-on-year.
In a note today, the research house said its revenue growth expectations is raised, judging by the even stronger capex planned for FY17E.
“We like KESM’s strong growth prospects in the automotive burn-in and test space, which is expected to offer strong structural multi-year growth.
“Maintain Buy but with a higher 12-month target price of RM21.80 (from RM16.40) after rolling forward our valuation horizon to calendar year 2018E EPS and on an unchanged 17x PER.
“Key risks include a loss of customers and a reduction in outsourcing opportunities as customers increase their in-house burn-in and test functions,” it said.