KUALA LUMPUR (Feb 21): Mercury Securities Sdn Bhd has a “subscribe” recommendation on soon-to-be-listed Cape EMS Bhd at 90 sen, with a fair value of RM1.53 based on FY24F EPS of 8.5 sen and a PE of 18x, in line with its peer’s five-year average.
In a note on Tuesday (Feb 21), the research house said it likes the stock for its attractive growth prospect on the back of its expansion plans for its EMS and aluminium die cast business.
“The target price represents a potential return of 70.0% over the IPO price,” it said.
Cape EMS is involved in electronics manufacturing services.
Through its subsidiaries, Cape is also involved in aluminium die casting and electronics manufacturing services, and the supply of parts and components.
Mercury said risk factors for Cape EMS include:
(1) failure to secure orders from customers; and
(2) raw material shortages arising from supply chain disruptions.