BOUYED by prospects of its electric vehicle (EV), energy storage (ES) and e-mobility segments, CGS-CIMB Research has reiterated its “buy” call on Genetec Technology Bhd with a higher target price of RM4.30 (previously RM4.15).
This is easily 53% above the company’s share price which is currently hovering at RM2.80. Yesterday, Genetec surged 28 sen or 10.94% to close at RM2.84 with a hefty 13.7 million shares traded after its 3Q FY3/2022 net profit surged to RM18.28 mil from RM889,000 in the corresponding period a year ago.
On a sequential basis, its 3Q FY3/22 net profit grew 12.3% quarter-on-quarter (qoq) to RM18.3 mil which is a record quarterly PATAMI (profit after tax and minority interest).
“9M FY3/2022 net profit jumped 34 times year-on-year (yoy) to RM42.8 mil. At 85% of our full-year estimates, we deem this to be above expectations,” opined analyst Mohd Shanaz Noor Azam and Walter Aw in a results review.
“Nevertheless, we expect a lower qoq sales and net profit in 4Q FY3/2022F due to the shorter operating period.”
According to CGS-CIMB Research, robust order book replenishment prospects abound in FY3/2023F with Genetec management expecting the group to secure RM60 mil worth of new orders which will bring the company’s order book to RM198 mil as of today.
Of the amount, RM50 mil are related to the EV & ES and e-mobility segments with the balance for the HDD segment.
“We gathered most of the new orders for the EV & ES segment are related to the pilot line for its North America customer’s ES expansion plan in California,” revealed CGS-CIMB Research.
“Meanwhile, the group expects more order replenishment in EV & ES and e-mobility solutions from its North America EV and Tier 1 automotive customers in FY3/2023F. We raise our FY3/2022-FY3/2024F EPS (earnings per share) by 3%-8% to account higher order replenishment.”
Elsewhere, CGS-CIMB Research also foresees exciting prospects for Genetec as it participates in Thailand’s EV ecosystem development with a potential partnership with Asia Precision Public Company Limited (APCS) which is mainly involved in contract manufacturing service of precision metal parts for automotive customers.
“We gather that APCS supplies battery pack covers for a leading renewable energy player in Thailand, whose 1GWh lithium-ion battery plant in Thailand recently commenced operations,” added the research house.
At 11.24am, Genetec was down 4 sen or 1.41% to RM2.80 with 5.23 million shares traded, thus valuing the company at RM1.91 bil. – Jan 27, 2022
