KUALA LUMPUR: Vitrox Corp Bhd
’s latest quarterly results came in above Maybank Investment Bank Research’s expectations.
“Despite a seasonally soft quarter, 1Q17 revenue hit a record high at RM70mil while core net profit of RM19mil came in at 30% of our and consensus full-year forecasts,” Maybank said.
The research house said the strong demand in Vitrox’s AXI division prompts its 23%-48% FY17-19 profit upgrade.
Maybank has a ”buy” call on Vitrox with a higher a 53% higher target price RM7.20 as it pegged Vitrox to 18x CY18 PER (from 14.5x), in line with regional peers.
Typically, in the past four years, 1Q revenue had been the weakest for Vitrox. Its 1Q17 however positively surprised, Maybank said.
“Coupled with a surge in its end-Mar 2017 book-to-bill ratio to 1.44 times, these could point towards more record-breaking revenue in the sequential quarters,” Maybank said.
The research house said it has incorporated a higher US dollar to ringgit of 4.30 (from 4.20), the strong 1Q17 and higher sequential demand for AXI, MVSS and ECS.
It has raised its FY17/18/19 core net profit forecasts by 23%/48%/39%.
In addition, it said Vitrox’s 1-for- 1 bonus issue should also enhance the stocks liquidity.
Maybank said equipment players regionally have re-rated and now trade at an average of 18x CY18 PER. It believes Vitrox too, deserve to trade at similar valuations.
“Vitrox’s valuations are undemanding at 14x CY18 ex-cash PER (end 1Q17 net cash: MYR83m) post our earnings lift,” it added.
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