PETALING JAYA: Electronics manufacturing services (EMS) company Cape EMS Bhd
, en route to a Bursa Malaysia listing next month, has “robust” growth prospects, backed by its expansion plans.
TA Research said, in a report, that at an initial public offering price of 90 sen per share, it is priced at a trailing price earnings of 31.6 times 2021 earnings per share (EPS).
“As we assign a target price-to-earnings multiple of 17-times against its 2024 EPS, we derive a fair value of RM1.35 per share. This takes into consideration Cape EMS’ robust growth prospects, backed by its expansion plans.
“Furthermore, we have also taken into account its experienced management team and diversified exposure to industrial and consumer electronics,” TA Research said.
In a report to clients, the research house also projected Cape EMS’ revenue and core net profit to grow at a three-year compounded annual growth rate of 29.8% and 41% to RM753.2mil and RM73.5mil in financial year ending Dec 31, 2024 (FY24).
“We expect growth to be driven by increased orders from existing major customers for wireless communication equipment, smart utility data collection equipment, point of sales terminals, household appliances, and electronic cigarettes.
“Additionally, we also view prospects for the group to capture opportunities from new customers, facilitated by the trade diversion theme and plans to expand capacity of its EMS operations,”it said.
Cape EMS’ near-term visibility is also supported by its unbilled purchase orders of RM358.7mil (RM335.1mil for industrial electronics and RM23.6mil for consumer electronics), which is expected to be fulfilled by the fourth quarter of FY23, TA Research added.
It noted that in the nine-month FY22 period, Cape’s revenue was mainly contributed by industrial electronic products at 58.8% and this was followed by consumer electronic products at 38%.
“EMS for industrial electronics include wireless communication equipment, smart utility data collection equipment, point-of-sale terminals, digital vending machines, portable printer power desks, and lighting products while those for consumer electronics include household appliances and electronic cigarettes.
“The group’s major customers are Airspan Communications and Mimosa Networks, Tastar Electronics, SOQ Sourcing, NextCentury Submetering Systems, and K&Q.”
