Phillip Capital has a good feeling about NationGate’s earnings
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00:00 As earnings season slowly heats up this Thursday, it is Nation Gate we are looking at, where
00:06 Phillip Capital has a buy call on the stock following its most recent third Q. It has
00:10 a RM1.80 target price, which implies a possible 48% upside.
00:16 Cliff Notes, third quarter revenue was stronger at RM166 million, predominantly driven by
00:21 a recovery in both networking and telecommunication and data computing segments.
00:26 In tandem with the stronger and higher consignment-based revenue, third quarter EBITDA margin increased
00:31 to 21%, which drove a higher CoreNet profit of RM19 million.
00:37 Philip Cap is keeping its earnings forecast unchanged on the expectation of a stronger
00:41 fourth quarter result performance.
00:43 It likes that Nation Gate is being a prime beneficiary of the trade diversion and is
00:49 strategically positioned in the key secular growth trends, namely 5G, AI data center and
00:55 electric vehicles, to drive a three-year net profit CAGR of 27%.
01:00 Risks to its call include prolonged weaker consumer demand, delay in new production introduction
01:06 and margin compressions.
01:07 Bloomberg data shows four updated calls on Nation Gate, all of them buys, with the target
01:11 price averaging out to RM1.78, which is 56 cents higher than its last close midweek.
01:17 [Music]