HLIB Research said stabilised earnings will allow Notion VTec to position and prepare for further expansion in FY25.
PETALING JAYA: Notion VTEC Bhd
anticipates the fourth quarter of its financial year 2024 (FY24) to progress at a moderate pace, in view of the volatility in foreign-exchange (forex) markets.
The provider of precision components and tools remains confident that FY24 will set a new benchmark in terms of both revenue and profits, marking a record year.
Stabilised earnings will allow Notion VTec to position and prepare for further expansion in FY25, said Hong Leong Investment Bank Research (HLIB Research).
The research house has maintained its “buy” call on the counter with an unchanged target price of RM3.28 a share, pegged at 30 times of mid-2026 fully diluted earnings.
HLIB Research said it is well positioned to capitalise on the increasing adoption of artificial intelligence (AI), advancements in disk storage capacity, global manufacturing diversification and revival of the electrical and electronics sector.
The company reported nine-month FY24 (9M24) core net profit of RM39mil, thanks to stronger-than expected earnings before interest, tax depreciation and amortisation (Ebitda).
Aided by the favourable forex rates, the company’s top line for the period gained 36% to RM341mil as the higher contributions from hard disk drive, automotive and electronic manufacturing services (EMS) were more than sufficient to negate the weakness in its camera and industrial segments.
For 3Q24, the company recorded its strongest ever revenue of RM136mil, translating into a core profit after tax of RM19mil, bringing 9M24 to RM39mil, which was above expectations.
Besides the stronger US dollar, revenue surged by 63% thanks to improvements from all its segments: HDD (143%), automotive (10%), EMS (93%) and camera and industrial (2%) segments.
Earnings improved from a loss of RM3mil in 3Q23 to RM19mil in 3Q24, attributable to higher Ebitda margin, lower depreciation and amortisation and lower effective corporate tax rate.
