Company Background. P.I.E. Industrial (PIE) specialises in electronics manufacturing services (EMS) and the production of wires and cables for various industrial applications. PIE manufactures a variety of industrial products, including cables/wires for electronic devices, cable molding compounds, printed circuit board assemblies, and cable & wire harnesses for computer, communication and consumer electronics. PIE serves MNCs across America, Europe, Asia and Asia Pacific.

Prospects. (i) The upcoming expansion and renovation of 2 plant facilities in 2023 are anticipated to significantly boost production capacity, which the group aims to meet the needs of both existing and potential customers, leading to overall revenue growth, (ii) Potential to tap into the electric vehicle (EV) industry as a supplier of EV wire harness in view of the rising EV manufacturing industry in Thailand, and (iii) Aiming to win new customers in diverse industries such as medical, industrial, consumer and telecommunication via its fully built-up vertically integrated manufacturing facilities.

Financial Performance. In 3QFY23, PIE reported a higher revenue of RM301mil (+15.4% YoY) with a PAT of RM20mil (+25% YoY). This was mainly due to higher revenue recorded from new/existing customers for EMS, higher margin stemming from better product mix, gain from foreign currency exchange and lower administrative/distribution expenses.

Valuation. PIE is trading at an attractive FY24F P/E of 15.7x, versus Bursa Technology Index’s 5-year forward average of 23.3x. As a comparison, NationGate and Aurelius Technologies, both also involved in electronic manufacturing services (EMS), trade at a much higher FY24F P/E of 20.8x and FY24F P/E of 23.3x respectively.

Technical Analysis. We expect further upside for PIE after it posted a long white candle and pushed above the RM3.20 resistance a few weeks ago. Together with the uptrend line derived from the August low and rising EMAs, these positive signs show that there is still upside room from here. A bullish bias may emerge above the RM3.20 level, with stop-loss set at RM2.98, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM3.60, followed by RM3.80.

Source: AmInvest Research - 11 Dec 2023