PETALING JAYA: Cape EMS Bhd
’s multiple legs of growth are expected to supercharge a three-year revenue/core net profit compounded annual growth rate (CAGR) of 25% to 32%, according to UOB Kay Hian Research.
This is premised on its strategic portfolio exposure, trade diversion-related supply chain reconfiguration and aggressive expansionary plans.
It also has better order loadings from its key customers as stated in its strong unbilled purchase orders of RM358.7mil.
The research house said Cape EMS, an electronics manufacturing service provider, is one of the fastest growing EMS names with strategic exposure to both the industrial and consumer sectors.
It expects the industrial electronics segment to extend the company’s CAGR momentum (two-year CAGR of 28% from 2022). In particular, its wire communication equipment could spearhead double-digit growth from 2023 onwards following a new replacement cycle alongside equipment deployment into new markets.
For its consumer electronics segment, Cape EMS’ Customer A, which carries the highest gross margin, could continue to anchor a quarter of total revenue going forward, the research house noted in a report.It added since the US-China trade war in 2018, Cape EMS has been benefiting immensely from trade diversion which saw its earnings base swell nine-fold from merely RM3.8mil in 2019 to RM33.5mil in 2022.As of 2022, Cape EMS had five anchor customers, all bellwethers in their own niches, with a strategic portfolio exposure of 60:40 between the industrial electronics and consumer electronics.
This provided the company a balanced expansion profile underpinned by high growth and steady volume loaders.
