KUALA LUMPUR: Maybank Investment Bank Research has maintained its Sell call and target price of RM4.68 on Vitrox Corp Bhd
as its M9FY17 core earnings remained marginally below its expectations owing to higher component costs.
"Coupled with a revision to our USD/MYR forecasts (from 4.30 to 4.15 for FY17/18 average), we trim FY17/18/19 core net profit forecasts by 2%/3%/3%," it said.
Maybank IB Research said 3Q17 net core net profit of RM22mil took 9M17 net profit to RM61mil and met 72% and 74% of its and consensus full-year forecasts.
"Record volume shipment in the ABI division sustained ViTrox’s q-o-q revenue growth for the tenth quarter in a row; slight margin erosion led to bottomline hitting a new high," it said.
However, EBIT margin contracted 1.2 percentage points q-o-q due to higher component costs coming from supply shortage of components and fabricated parts due to overwhelming orders from most equipment buyers.
Tapering book-to-bill ratio and component shortages may end ViTrox's quarterly revenue growth in qQ17 while a strengthening ringgit against the USD poses downside earnings risk to net USD exporters such as ViTrox, said AmInvestment Research.
"We now project slower earnings growth in FY18 of 20% YoY (FY17: +34% YoY) after imputing our FX Research’s revised USDMYR forecasts. Our revised forecasts have considered (i) a capacity
expansion into Campus 2.0, (ii) replacement cycle of the AXI equipment."
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