CIMB Research believes the proposed disposal will be positive for the group and remove the potential earnings drag from CLT.
PETALING JAYA: Genetec Technology Bhd
’s proposed disposal of a 51% stake in CLT Engineering Sdn Bhd to its former executive director Tan Moon Teik for RM21.63mil will enable it to realise the value of its investment in the latter.
The cash proceeds from the disposal will also help meet its funding needs for raw material purchases within the electric vehicle and energy storage segments.
This includes components and consumables such as fasteners, connectors and connector pins.
Upon completion of the disposal, the group’s cash reserves are expected to rise to RM52.7mil from RM31.1mil, said CIMB Research.
It said Genetec stands to book a RM291,000 gain from the proposed disposal, excluding RM500,000 in estimated transaction expenses.
The research house believes the proposed disposal will be positive for the group and remove the potential earnings drag from CLT.
CLT specialises in parts fabrication and system assembly for back-end equipment for the manufacturing of hard disk drive lines and semiconductors for the electrical and electronics industry.
Genetec’s stock has fallen by 71% year-to-date, led by slower order replenishment amid cautious approach from its customers, mainly attributed to policy uncertainty ahead of the United States presidential election and the risk of a global economic slowdown causing the automotive supply chain to defer new capacity expansion plans.
CIMB Research is maintaining its “buy” call on the stock with an unchanged target price of RM1.50 a share, based on a 17 times 2025 price earnings ratio.
