Mercury Securities says promising horizons await QES group
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00:00 This morning, we're taking a look at QES Group, which makes and distributes inspection,
00:06 test, measuring, analytical and automated handling equipment.
00:10 Mercury Securities has a buy recommendation on the stock and target price of 70 cen.
00:16 The counter settled yesterday at 60 cen.
00:19 QES just announced two Q results and according to Mercury, they were within expectations.
00:25 Revenue was at 47.6% of the research house's full year estimates, while net profit was at 44.6%.
00:33 Among the investment highlights, order book is at RM106 million as of July 2023,
00:39 cash position at RM42.5 million, up 27.6% year-on-year.
00:44 QES is building a new factory in Batu Kawan, Penang that will enable it to diversify its
00:50 geographic revenue stream outside of the ASEAN region.
00:53 It boasts a consistent annual recurring income of approximately RM50 million via the maintenance
00:59 and service of large equipment install base.
01:03 Mercury revising its revenue estimates by -6.1% for FY23 and +0.2% for FY24,
01:11 as well as its earnings forecasts by -5.4% for FY23 and -1% for FY24,
01:18 in line with a slowdown of the overall semiconductor industry.
01:22 It said it likes the stock due to its attractive growth prospects,
01:26 and the fact that it's well positioned to leverage on the semiconductor industry.
01:31 According to Bloomberg data, two other research houses have QES in their stock universe.
01:36 Apex Securities has a buy recommendation and target price of 73c.
01:41 RHB Research has a target price of 62c, though it did not rate the stock.
01:46 So that's two buy recommendations in total, with target prices averaging out to 73c.
01:52 QES last closed at 60c, that's a potential upside of about 21.7%.
01:58 [MUSIC]