Maybank IB Research said it expects sequential improvement in 2Q24 earnings.
PETALING JAYA: Notwithstanding the expected improvement in Vitrox Corp Bhd
’s sequential second-quarter 2024 (2Q24) earnings from order backlogs, the technology company’s outlook remains challenging.
Maybank Investment Bank (Maybank IB) Research said that following a slow 1Q24 core net profit of RM17.7mil, it expects sequential improvement in 2Q24 earnings on delivery improvements in the outsourced semiconductor assembly and test (Osat)-centric machine vision system, both for tray and standard based (MVS-T/S) segments.
“Underpinned by order backlogs, we expect 2Q24 segmental turnover to rise by 65% and 60% quarter-on-quarter for MVS-T/S respectively.
“However, beyond 2Q24 earnings, both segments face headwinds from capacity constraints in material sourcing and lead-times, slower pace of Osat recovery in the automotive, industrials and telco end-markets, as well as intensifying competition from Chinese peers.
“Meanwhile, we expect flattish 2Q24 growth in Vitrox’s automated board inspection segment from offshore expansion slowdown by key China and Taiwan contract manufacturing customers,” it added.
Backed by aggressive government funding to achieve tech self-sufficiency – the latest being a US$47.5bil semiconductor fund launched at the end of May – it said Malaysian automated test equipment players could be at risk of losing some market share to the heavily subsidised domestic Chinese players.
“There could be margin pressures for research and development as well as marketing spend to improve on product features to defend their market share,” Maybank IB said.
Separately, Vitrox said in a filing with Bursa Malaysia on Monday that it was awarded a RM45.99mil contract in a related-party transaction to build a block of five-storey training and industrial research centre, known as Vitrox Institute of Technology, in Penang.
The project is planned on a 21.03-acre land that was acquired in June 2021. Construction works will commence on July 8, 2024 and is expected to be completed by Jan 7, 2026.
