ViTrox rises as much as 9.78% after posting record 2Q earnings

KUALA LUMPUR (July 23): ViTrox Corp Bhd rose as much as RM1.72 or 9.78% to RM19.30 this morning, after the group announced its net profit for the second quarter ended June 30, 2021 (2QFY21) more than doubled to a record RM50.64 million from a year ago amid the semiconductor boom.

The electronics firm, which emerged as the top gainer this morning, settled at RM19.24 at 11.07am, still up RM1.66 or 9.44%.

At RM19.24, the counter was valued at RM7.91 billion. It saw 464,800 shares traded.

Maybank Investment Bank Research’s analyst Kevin Wong said in a note today, he has upgraded ViTrox to “buy”, as he views the group’s earnings growth outlook has turned more favourable, which also goes in tandem with the global industries upcycle.

He also revised up ViTrox target price (TP) by RM3.40 to RM20.20.

He said ViTrox’s second quarter results came in above the research house and street’s estimates at 57% and 59% respectively.

He raised the group’s earnings for the financial year ended Dec 31, 2021 (FY21) by 24%, while he expects an increase of 25% and 26% for FY22 and FY23 respectively, after assuming larger sales volume across all product segments and some improvements in margins.

“We remain positive on ViTrox’s near-term earnings outlook, which is attributed to the global semiconductor industry’s upcycle, mass deployment of 5G networks, and rising demand for 5G-related devices.

“Notably, ViTrox’s capacity has been fully booked up to 3Q21 and we believe this could extend into coming quarter(s) if demand remains robust,” he said.

According to him, ViTrox’s mid- to long-term outlook is also supported by its expansion plans, where ViTrox is estimated to complete the construction of its new facility (Campus 3.0) in 2023 and this could double its capacity.

Meanwhile, Hong Leong Investment Bank’s analyst Tan J Young also said in a note today that ViTrox’s 1HFY21 core net profit of RM83 million surpassed expectations, accounting for 60% and 57% of the research house and street estimates respectively.

He raised ViTrox earnings per share for FY21 by 35%, FY22 by 30% and FY23 by 43%, after raising its revenue forecast.

While reiterating his “buy” call on ViTrox, he raised the group’s TP to RM23.28 from RM17.95, reflecting the upward earnings revision.

“We opine that global contract manufacturers/electronics manufacturing services’ large-scale relocation, expansion and order diversion activities will create an insatiable demand for its products.

“ViTrox’s technology leadership and asset-light business model will continue to drive growth going forward,” it said.

Meanwhile, AmInvestment Bank’s analyst Jeremie Yap said in a note today that he raised ViTrox net profit forecast for FY21 by 14%, FY22 by 18%, FY23 by 19%, to reflect stronger sales assumptions for ViTrox’s machine vision systems (MVS) and automated board inspection (ABI) segments.

He also increased ViTrox’s fair value by 12% to RM13.43 from RM12.03.

“ViTrox’s 1HFY21 core profit of RM85 million beat expectations, coming in at 61% and 58% of our full-year forecast and full-year consensus estimates respectively,” he said.

He said he likes ViTrox for its attractive MVS and ABI product offerings driven by innovation and strong growth potential underpinned by a significant inroad into the high-growth markets in Taiwan and China.

However, he maintained a “sell” call on ViTrox, as the upside potential to its share price is capped given the lofty valuations of 53 to 43 times its FY21 to FY22 earnings.

Source: TheEdgeMarkets