AmInvest Research starts coverage of Salutica with Hold call

  • Business
  • Monday, 10 Jul 2017

KUALA LUMPUR: AmInvestment Research has started coverage of electronics manufacturing services (EMS) company Salutica with a Hold recommendation and a fair value of RM1.70 a share.

It said on Monday its fair value was based on FY19F price-to-earnings (P/E) of 15 times. 

“Our P/E multiple is slightly higher than the peer average of 13 times as we think Salutica deserves scarcity premium for being the only listed Bluetooth player in Malaysia,” it said. 

Salutica specialises in Bluetooth devices such as stereo headsets. It works with some of the most prominent players in the wireless headphone market including Plantronics, Jaybird and Sony. 

“We forecast Salutica's profit after tax and minority interest (Patami) to grow from RM24mil in FY16 to RM44mil in FY19F, representing a three-year compounded annual growth rate (CAGR) of 22%,” it said. 

AmInvest Research said one of the four factors were an accelerated uptake of wireless Bluetooth earphones sparked by the removal of headphone jacks by smartphone makers and the availability of near-field communication (NFC) technology that enables quick and automatic pairing.

Secondly, a pick-up in AirBar orders as consumers upgrade to Windows 8 or 10.

Thirdly, replacements of expensive touchscreen solutions such as capacitive with Neonode's zForce technology, which could potentially bring manufacturing jobs to Salutica; and 

Fourthly, rising adoption of Salutica's TPMS products (FOBO) by logistic companies, especially those with trucks, to ensure the safety of drivers.   
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