KUALA LUMPUR (Feb 25): Shares in ViTrox Corp Bhd rose as much as 76 sen or 4.42% to RM17.96, on the back of strong earnings growth as well as target price upgrade.
At 10.07am, the counter pared some gains at RM17.70, still up 50 sen or 2.91%. It was the second top gainer this morning.
The group announced yesterday that its net profit for the fourth quarter ended Dec 31, 2020 (4QFY20) surged 79.41% to RM31.92 million, from RM17.79 million a year ago, as its revenue soared 68.3% to RM159.79 million, from RM95.1 million a year ago.
For the full year ended Dec 31, 2020 (FY20), the group’s net profit jumped 32.6% to RM105.62 million, from RM79.65 million a year earlier, as its revenue rose 38.51% to RM470.38 million, from RM339.59 million.
Hong Leong Investment Bank Research’s analyst Tan J Young said in a note today, he has revised up ViTrox’s target price to RM16.88 (from RM12.43), after lifting its earnings forecasts and price to earnings multiple to 45 times from 35 times.
He also said ViTrox's FY20 core net profit of RM110 million beat his but matched consensus estimates.
“Top line growth was attributable to higher contributions from all product lines leading to bottom line improvement on the back of higher efficiency,” he said.
Meanwhile, Tan noted North America-based manufacturers of semiconductor equipment posted US$3.04 billion in billings worldwide in January 2021, up 13% month on month and up 30% year on year.
“ViTrox shared that so far it has been experiencing robust demand across all business units so far. It also encounters longer material lead time due to global shortage of certain raw material and is working vigorously to resolve the challenge.
“ViTrox has also started expanding the manufacturing capacity by at least 30% in 2021 in order to cope with the orders while continuing to take prudent cost control measures in order to stay competitive and resilient,” he said.
Tan, therefore, raised ViTrox’s FY21 to FY22 earnings projections by 5% and 4%, respectively.
Tan also reiterated a "hold" call on the stock.
“We opine that global contract manufacturing/electronics manufacturing service large scale relocation, expansion and order diversions activities will create a big demand for its products.
“Although its technology leadership and asset-light business model will continue to drive growth going forward, its risk reward profile looks balanced at this juncture,” he said.