Affin Hwang Capital research said the company has acquired a new key foreign customer within the segment and is in the latter stages of qualifying for another major customer.
It said sales from the new foreign customers alongside the potential new client would contribute materially from 2H2019 and make up for the loss in hygiene sales.
"Following a full-year earnings contribution from its new clientele, we foresee that the hygiene segment’s earnings growth would similarly remain robust in 2020 and contribute to our projected group 29% yoy EPS growth," it said.
Meannwhile, the research house said the insulation segment should be supported by a stable outlook for the auto markets.
The insulation segment fared well in 2018 on higher contributions from the local and Indonesian auto markets.
Affin Hwang said Oceancash has been supplying felts to new models on the local market as well as existing models that incorporate more felt insulation.
"This should buoy its local felt sales, as our auto analyst expects low- and mid-end models to outperform the industry’s TIV growth in 2019," it said.
The research house maintained its buy call on Oceancash with a target price of 51 sen.
"At 10.5x forward PE, the stock trades at a steep discount to its historical valuation range and peers within the hygiene and autoparts sectors," it added.
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