PETALING JAYA: ACE Market-bound Crest Group Bhd is poised for growth on the back of anticipated recovery in the global semiconductor industry.
Mercury Securities said Crest, having been mainly involved in the distribution of imaging, analytical and test equipment solutions to different industries, has shown consistent revenue growth given its diversified geographical presence and strong balance sheet.
The research house said the company achieved a three-year compounded annual growth rate of 14.7% in financial year 2020 (FY20) to FY23.
It added that the majority of Crest’s clients were from the semiconductor industry, which has been suffering since the second half of 2022 and has only begun recovery in 2024.
Mercury Securities stated that it expects Crest to achieve a healthy revenue growth of 8% to 13% in FY24 to FY26 underpinned by several key factors.
One of those factors is the recovery in the global semiconductor market which is anticipated to bounce back and expand by 16% and 13% in 2024 and 2025, respectively.
The research house said it foresees that the China+1 strategy will continue to drive new investments into South-East Asia, particularly key markets in Malaysia and Thailand as well as its new expansion into Vietnam.
The research house noted that given the nature of its distribution business model, Crest has maintained a stable gross profit margin of between 28% and 29% in previous years. It anticipates Crest to uphold its gross profit margins at 29% following the recovery of the semiconductor industry
It has a “subscribe” call on Crest with a fair value of 55 sen based on 20 times FY25 earnings per share.
