The research house forecasts that the remaining of the 2022 year will be more robust given PIE’s successful recruitment of new foreign workers. (File pic shows PIE Industrial factory in Seberang Jaya.)
KUALA LUMPUR: P.I.E. Industrial Bhd
could be seeing a stronger second half of the year, following the group’s first half results, which came within MIDF Research’s expectations.
The research house forecasts that the remaining of the 2022 year will be more robust given PIE’s successful recruitment of new foreign workers.
Its soon commencement of operations of its new 120,000 square feet plant could also help support its results, it said.
“Despite getting the approval for lower number of foreign workers than requested, PIE is confident that it would be sufficient to stabilise its production activities and support its growth plan in the near term.
“The recruitment process has started and is expected to be completed by the end of August,” MIDF Research said.
It also noted that PIE’s earnings would be driven by its factory capacity expansion plan which is being fueled by strong demand from its existing and newly acquired major customers as its existing capacity is almost fully utilised.
“We are looking at an additional capacity of about 25% in the coming quarters,” it said.
MIDF Research maintained its “buy” call on PIE with a higher target price of RM3.86 from RM3.45 before.
MIDF Research also rolled over its base year to the 2023 forecast financial year pegged to an unchanged price-to-earnings ratio (PER) of 19 times.
“Our valuation represents a slight premium to its peers’ forward average PER of 18 times, but we believe it is justified given its ability to leverage on Foxconn’s purchasing power and its strong customer base which allows for margin expansion,” it said.
MIDF Research said PIE’s core net profit had taken a 44.5% year-on-year dip in the quarter, despite recording higher order volume.
