HLIB Research says it likes ViTrox’s technology leadership and asset-light business model but does not expect demand to recover in the short-term
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00:00 In focus this Monday morning is Vitrox.
00:04 Hong Leong Investment Bank Research upgrading it to hold from sell,
00:08 though it trimmed its target price to RM6.70 from RM6.77 previously.
00:14 The counter settled last Friday at RM6.92.
00:17 A quick look now at its fiscal results.
00:20 Nine months' core net profit came in at RM103 million,
00:23 down 27% year-on-year on lower-than-expected top line.
00:28 The figure missed HLIB's full-year estimate at 66%
00:31 and only made up 61% of consensus forecast.
00:35 Bill-to-book ratio remained below parity and ended the third quarter at 0.9 times.
00:41 For the rest of the year, Vitrox says the global semiconductor industry may continue to face challenges.
00:47 It does, however, foresee a robust gradual recovery in FY24.
00:51 According to HLIB, the group has an optimistic outlook regarding the sustained growth in demand
00:57 from the AI, telco and auto sectors in the near future.
01:00 The research house revised downwards its core net profit forecasts for FY23 by 6%,
01:06 FY24 1% and FY25 2%.
01:10 It says it likes Vitrox's technology leadership and asset-light business model,
01:15 but does not expect demand to recover in the short term
01:18 as the supply chain continues to operate with excess capacity.
01:22 Quick look at consensus. According to Bloomberg data, analysts are rather split on Vitrox,
01:27 with five buys, two holds and two sells.
01:30 Average target price, RM8.23.
01:33 Vitrox ended trading on Friday at RM6.92, so that implies a potential return of 19%.
01:39 [music]