KUALA LUMPUR (Oct 23): ViTrox Corp Bhd’s share price soared to an all- time high of RM14.68 today after it delivered a stellar set of quarterly results.
The big leap in ViTrox's revenue and net profit helped to reinforce the optimistic view on the automated test equipment (ATE) segment.
Hence, the bullish sentiment has spilled over into its peers.
Mi Technovation Bhd’s share price also soared to a record high of RM4.79 after gaining as much as 37 sen or 8.37% this morning. The counter’s gains eased to RM4.77 at the noon break after some 4.28 million shares were traded. It was the third-highest gainer on the local stock exchange.
Similarly, Pentamaster Corp Bhd's share price pared some of its gains to RM5.49 — after it hit an all-time high of RM5.58 earlier in the morning by rising as much as 3.33% or 18 sen — with some 1.24 million shares exchanging hands.
Year to date (YTD), Mi Technovation is up by a whopping 151%, while Pentamaster has rallied 82% and ViTrox climbed 85%.
When contacted, Areca Capital Sdn Bhd chief executive officer (CEO) Danny Wong Teck Meng said that the entire semiconductor industry supply chain, including the ATE manufacturers, performed well in the third quarter of this year (3Q20).
The growth was driven by pent-up demand following the Covid-19 pandemic's disruption to global supply chains in the first half of this year (1H20), stronger demand from China on a strong recovery from the doldrums and growing demand for more 5G-enabled products, he told theedgemarkets.com.
ViTrox’s net profit for the third quarter ended Sept 30, 2020 (3QFY20) leapt 114% to RM29.71 million from RM13.86 million a year ago. Its quarterly revenue soared to a record high of RM123.75 million, boosted by a strong sales volume and optimisation of its production capacity.
Its cumulative nine-month (9MFY20) net profit was up by 19% at RM73.7 million from RM61.86 million for the previous corresponding nine-month period. Cumulative earnings per share (EPS) grew to 15.63 sen from 13.14 sen for 9MFY19. Meanwhile, revenue for 9MFY20 also increased 27% year-on-year (y-o-y) to RM310.59 million from RM244.5 million for 9MFY19.
Both AmInvestment Bank Bhd and Hong Leong Investment Bank (HLIB) Research deemed that ViTrox’s stellar 3QFY20 results came in within their expectations.
In a note today, AmInvestment said it continued to like ViTrox due to its leadership in the machine vision system (MVS) and automated board inspection (ABI) segments, alongside its key merits of market diversification efforts targeting high-growth regions such as Taiwan and China, and its focus on product innovation and improvement in lead time to strengthen its portfolio offerings.
While noting the positive outlook, AmInvestment deemed that the stock is fairly valued at the current share price.
Hence, it retained its "hold" rating of the stock with a fair value (FV) of RM10.56.
The research house said its FV is pegged at 35 times FY22 price-earnings ratio (PER), representing a slight premium above its benchmark target PER for large-cap automated test equipment (ATE) players of 33 times, given the group’s technology leadership and higher market capitalisation.
Similarly, HLIB Research maintained its "hold" rating of the stock,but with a higher target price (TP) of RM12.43 from RM11.45 previously. The higher TP was derived after its price-earnings (PE) multiple was lifted from 35 times to 38 times, pegged at mid-FY22 earnings per share (EPS).
HLIB Research opined that large-scale global electronics manufacturing services (EMS) relocation, expansion and order diversion activities will create big demand for ViTrox's products.
Meanwhile, AmInvestment upgraded its recommendation for Pentamaster to "hold" from "underweight", with a higher FV of RM4.61, a rise of more than 40% from RM3.21 previously, as it believes the group will see a gradual earnings recovery in 2HFY20.
The research house expects 2HFY20 to show a better performance due to expectations of higher demand for optoelectronics and 3D sensing technology in the telecommunications sector and automotive solutions.
ViTrox shares hit all-time high on solid earnings, record 3Q revenue
HLIB upgrades tech sector rating, expects multi-year earnings growth
Frontken rises 1.63% on positive technicals, 5G prospects