PETALING JAYA: Greatech Technology Bhd, which posted a 152% jump in net profit in the first quarter (Q1), is set to register a healthy set of results this year driven by its electric vehicle (EV) segment.
The company is strengthening its customer base with its United States subsidiary looking to secure more new battery cell testing equipment orders.
Analysts are bullish that the company is in a good stead with its current order book of RM293mil as it would facilitate its expansion.
Maybank IB Research said it is keeping its financial year 2021 (FY21)-FY23 earnings forecasts, where growth is mainly driven by new customers’ orders, namely in the EV segment.
“We forecast 31%-32% of revenue contribution from non-solar customers (EV and new customers) for production line system (PLS) orders to the group. Meanwhile, on aggregate, PLS revenues constitute 65%-66% of Greatech’s FY21-FY23 estimate revenue.
“Greatech’s latest order book remains commendable at RM293mil (as at April 9 compared with RM315mil as at Feb 4) contributed by the key EV and solar segments at 73% and 25%, respectively. Notably, Greatech targets eight new customers in the near term, coming from the EV, life science and semiconductor industries, ” the research house noted.
It is maintaining its “buy” call on the stock as it continues to like Greatech’s strong near-term earnings growth. It has maintained its earnings forecast and target price of RM6.75 for the stock at this juncture, pending new growth catalysts, namely new customers and sizeable orders.
However, Maybank IB said there were several risk factors for its earnings estimates, target price and rating for Greatech. A downturn in the solar photovoltaic (PV) industry will affect Greatech’s earnings. Additionally, forex volatility, especially in the US dollar/ringgit rate, would also affect the company’s earnings, it said, noting that more than two-thirds of its revenue and about a third of its cost of goods sold are denominated in the US dollar.
PublicInvest Research said it was tweaking its FY21-FY23 forecast by less than 1% due to housekeeping changes.
“We continue to like Greatech for its unique exposure to the PV and EV battery segment, as both the power and automotive industries are undergoing structural changes, ” it noted. It said it was maintaining its “outperform” call with an unchanged target price of RM6.80, based on a price earnings multiple of 40 times on its FY22 forecast earnings per share of 17 sen per share.