Maybank IB Research raises earnings estimates for Greatech, TP raised to RM1.55


  • Analyst Reports
  • Tuesday, 27 Aug 2019

KUALA LUMPUR: Maybank Investment Bank Research lifted its FY20/21 net profit estimates for Greatech Technology Bhd following a higher-than-expected order from an existing client.

The research house said the new RM203mil order exceeded its initial FY20E expectations that Greatech would deliver RM112mil of PLS and RM60mil of upgrading works.

Following the higher forecast, it reiterated its buy call and raised its target price to RM1.55 from RM1.38 previously as it rolled forward its valuation base year to FY20 on an unchanged 17x price-earnings.

According to Maybank Research, Greatech will also see a margin boost from the stronger US/ringgit conversion in the coming quarters due to the recent hike to 4.20 versus an initial expectation of 4.10.

"For FY19E, we project that 91%/32% of group revenue/COGS will be denominated in USD.

"Our sensitivity analysis suggests that for every 1% change in our revised USD/MYR rate of 4.15, GTT’s FY19E net profit could vary by 2+%," it said.

On its recently announced earnings, Maybank Research said Greatech's 1H19 core net profit of RM24.5mil came within its expectations as it met 48% of its full-year forecast.

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