KUALA LUMPUR: Shares in Vitrox Corp Bhd
fell in early Friday trade after its latest financial results came in below expectations
The electronics manufacturing services (EMS) provider fell 2.32%, or eight sen, to RM3.37, making it one of the top losers on Bursa Malaysia. Year-to-date, it has dropped nearly 6%.
ViTrox’s net profit fell 32.5% year-on-year (YoY) to RM22.5mil in the third quarter ended Sept 30, while revenue also slipped 2.2% to RM146.7mil.
In the first nine months (9M24), it posted a net profit of RM67.8mil on revenue of RM403.5mil.
CIMB Securities noted that ViTrox's 9M24 results fell short of expectations, achieving 63% of the house estimates and 58% of Bloomberg consensus estimates, attributed to a slower-than-anticipated recovery in the EMS market.
It said the group reported a narrowing 23% YoY decline in core EPS for 9M24, while 3Q24 core EPS increased by 17% quarter-on-quarter.
“We cut our EPS forecasts by 9-10% and expect ViTrox to rebound with positive EPS growth in FY25-26F driven by robust AI infrastructure spending and recovery in the rest of the semiconductor market,” it said, adding that it maintained a “hold” on ViTrox with a lower target price of RM3.80.
UOB Kay Hian (UOBKH) Research noted that while ViTrox’s 9M24 revenue was in line with the house’s 2024 sales forecast at 73%, it fell short of consensus estimates at 67%. Year-to-date net profit represented 65% of UOBKH's estimates and 52% of consensus estimates, respectively.
Following an 8.2% contraction in 2023, global semiconductor sales are projected to rebound by 16.0% YoY in 2024, according to World Semiconductor Trade Statistics.
This growth is expected across all segments, with memory leading the way at 76.8%, followed by logic at 10.7% and microchips at 1.6%.
Concurrently, July 24 sales marked the ninth month of yoy market growth in over a year, reaffirming that the cycle is recovering after 15 months of slowdown.
“As ViTrox is strategically exposed to high growth areas like telecommunications, computing and automobiles which have possibly passed the worst, we believe the wide improvement should bode well for a strong recovery in its 1H25 earnings. The group’s book-to-bill ratio stays above the 1.2 times parity after months of sluggishness,” UOBKH said.
“We cut our 2024-25 earnings by 10%/7% respectively, mainly to account for weaker US dollar/ringgit assumptions,” it added.
UOBKH has maintained its 'hold' rating on ViTrox with a revised target price of RM3.60, down from RM3.80 previously.
