KUALA LUMPUR (May 7): Maybank IB Research has maintained its "Buy" rating on Vitrox Corporation Bhd at RM3.55 with an unchanged target price of RM4.05 and said the company's 1Q15 net profit was expected to soften by 20%–36% quarter-on-quarter (q-o-q) on seasonal weakness; expect stronger 2Q15 results.

Vitrox (fundamental: 3; valuation: 1.50) is expected to announce its 1Q15 corporate results on May 21.

Maybank IB said it expects Vitrox to report a net profit of RM8 million to RM10 million (down 20%–36% q-o-q; 13%–16% of its full-year forecast) on the back of slower q-o-q revenue of RM32 million to RM35 million (down 18%–25% q-o-q, up 40%–53% year-on-year) underpinned by seasonally slower semiconductor demand for equipment.

However, it said the revenue shortfall would be cushioned by the stronger US dollar against the ringgit, adding that Vitrox is a net exporter of US dollar.

"On a y-o-y basis, Vitrox only recorded a revenue of RM23 million in 1Q14 and an average RM15 million in the past three 1Q revenues. On average, 1Q earnings make up only about 16% of annual net profit.

"Maintain Buy with an unchanged target price of RM4.05, pegged on unchanged 13.5x CY16 PER," it said.

At 11.45am, Vitrox gained 0.56% or 2 sen to RM3.57 with 21,000 shares done.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)