INTEGRATED engineering supporting services provider Coraza Integrated Technology Bhd is set to ride on the semiconductor boom as there are no signs of a slowdown in spending or expansion by its customers despite uncertainties stemming from the COVID-19 pandemic.
In fact, the health crisis will have a positive impact on the semiconductor industry in the long run with the push towards digitalisation and the adoption of new technologies, according to the company’s managing director Lim Teik Hoe.
“As the backbone of all electronic products, semiconductors will be one of the most important sectors in which technology is expected to play a much greater role than before. Right now, the industry is experiencing an unprecedented boom,” observed Lim.
“Coraza provides integrated engineering support to its customers, many of whom are large multinational corporations who are market leaders in their respective field and from high growth industries such as semiconductor, instrumentation, life science and medical devices, telecommunications, aerospace, and electrical and electronics.”
Coraza made a 39.5 sen or 141.07% gain on its debut on Bursa Malaysia’s ACE Market when it closed at 67.5 sen during today’s mid-day trading break from its initial public offering (IPO) price of 28 sen.
Despite a sluggish market sentiment, Coraza has held steady, trading between a range of 60 sen and 70.5 sen, with 147.65 million shares traded which valued the Nibong Tebal (Penang)-based company at RM210 mil.
UOB Kay Hian Research has initiated coverage on Coraza with a “buy” rating and a target price of 65 sen based on 21 times 2022F price-to-earnings ratio (PE) which is at 50% discount to its industry peers average forward PE.
“Our PE multiple yardstick implies an undemanding price-to-earnings growth (PEG) ratio of 0.6 times given its multi-year growth story,” opined analyst Desmond Chong in an initiate coverage report.
“Blue-sky valuation if pricing at one time PEG ratio suggests a potentially higher target price of RM1.05 (at 34.6 times 2022F PE).’
Meanwhile, TA Securities Research derived a fair value of 56 sen for Coraza by ascribing a target PE multiple of 20 times against the company’s FY 2022 earnings per share (EPS).
“We view that the assigned PE multiple is warranted by Coraza’s robust earnings growth profile (FY2021/FY2022/FY2023: +66.5%/+13.4%/+12.0%) which is backed by its major customers exposure to high growth segments including semiconductor, life science and medical devices, aerospace, and instrumentation,” added analyst Wilson Loo in an IPO update. – Jan 20, 2022
