KUALA LUMPUR (Jan 6): Apex Research has derived a target price of 54 sen for ACE Market-bound TT Vision Holdings Bhd (TTV) based on 20 times price-to-earnings ratio (PER) which is 15% of comparable peers’ average forward PER of 23.5 times and TTV’s financial year 2023 (FY2023) forecasted earnings per share (EPS) of 2.7 sen.
In a note on Friday (Jan 6), the research house said the main customers of TTV are involved in solar and electric vehicles (EVs).
It said TTV is set to benefit from the mass adoption and rapid development of solar energy and EVs with their optoelectronic and solar inspection machine.
“According to industry research, the global EV industry is expected to grow at a CAGR (compound annual growth rate) of 17.8% by CY2027 (calendar year 2027) while solar energy industry is expected to grow at a CAGR of 20.5% by CY2026,” it said.
Apex said TTV is expected to benefit from China’s reopening, adding that TTV serves two key markets, which are Malaysia and China.
It said China has accounted for 73.45% of the group’s FPE2022 total revenue.
“Following the easing of Covid rules in China and China’s government [focusing on] providing impetus to build their domestic semiconductor ecosystem, we are optimistic on the orderbook growth from China for TTV’s Wire Bond AOI machine.
“The group has the R&D capabilities to carry out product innovation and development which enable them to ensure business sustainability and competitive advantage.
“For instance, TTV has successfully secured two patents related to solar cell sorting and inspection methodology. In addition, TTV has obtained the first order for X-ray automatic inspection equipment, and it is expected that the product production will begin in late 2023,” it said.
Apex expects TTV’s revenue to grow by 19% year-on-year (y-o-y) in FY2022 and then further grow 13% y-o-y in FY2023 and 16% y-o-y in FY2024, underpinned by the positive outlook of the industry and benefiting from China’s reopening.
“Our net profit forecast is a surge by 47% y-o-y in FY2022 due to the stellar performance in discrete component equipment from China followed by a 4% y-o-y growth in FY2023 after taking account the listing expenses and the slower global economic market outlook in FY2023,” it said.