The Daily Pulse of Bursa Malaysia

Edelteq offers interesting upside to investors

zaclim
Publish date: Wed, 12 Jun 2024, 09:37 AM
zaclim
0 194
Daily Pulse is a blog that provides daily stock updates and insights on the Bursa Malaysia.

Follow us in telegram for more daily discussion
https://t.me/xifuinvcommunity

Edelteq Holdings Bhd, an engineering support provider for integrated circuit assembly and test processes, closed at its 10 month high of 52 sen on June 11.

The counter bulls is likely to continue its leg up from here, with follow-through buying lifting prices towards the historical resistances at 56 sen and 59 sen next.

This is still far below its 52-week high of 76 sen but manifold higher from its low of 24 sen.

Recall that this counter made a strong debut on the ACE Market of Bursa Malaysia on June 7 last year.

It opened at 75 sen, a 51 sen or 212.5% premium from its initial public offering (IPO) price of 24 sen.

Edelteq is in a sweet spot, riding on the bullish sentiments of the semiconductor industry as the government aims to provide a Rm25 billion boost via incentives under the new National Semiconductor.

The Company, through its subsidiaries, offers products and services for semiconductor packaging, inspection, monitoring, automation, and testing processes.

In January, Edelteq signed a Memoranda of Understanding (MOU) with a Chinese company and a Malaysian outfit to start semiconductor-related businesses locally and abroad.

It had inked one MOU with China-based CYG Semiconductor Equipment (Zhuhai) Co Ltd to set up two companies — one in China and another in Malaysia — that will be involved in semiconductor-related businesses.

Under the MOU with CYG, Edelteq said the entity in China will be involved in semiconductor equipment design, manufacturing and the sale of substrate wafer automatic optical inspection.

Meanwhile, the Malaysian entity will deal with semiconductor equipment design, manufacturing and sale of IGBT module packaging machines.

Under the agreement, both parties agree that Edelteq would hold a 51% stake in the Malaysian company, while CYG would hold 51% in the entity to be incorporated in China.

CYG — which is involved in the research and development, manufacturing and sale of semiconductor equipment — is an 83.33% indirect subsidiary of Changyuan Technology Group Ltd, a public-listed company in the Shanghai Stock Exchange.

Edelteq also inked an MOU with local optical inspection system firm Halo Technologies Sdn Bhd (HTSB) to set up a business involved in semiconductor design, manufacturing, and sale of substrate automatic optical inspection (AOI) system.

HTSB does research & development work, including designing, development and selling of optical inspection systems using artificial intelligence technology.

However, Edelteq has not fared well.

In its first quarter ended Mar 31, 2024, the company saw a dip in its net profit to RM1.7 million from RM3 million a year ago.

This was on the back of lower revenue of RM7.9 million from RM9.8 million.

Its operational cash flow had also turned negative with a deficit of RM1.1 million as at Mar 31,2024 versus a positive RM2.5 million a year ago.

The automatic test equipment (ATE) segment as well as the B&P segment are the two major revenue contributors to the Group, which contributed 78.62% to its revenue for the current financial quarter under review.

The decline in profit was mainly due to administrative expenses of RM1.44 million.

The administrative expenses mainly comprise of directors' remuneration, staff costs and professional fees amounting to an aggregate of RM1.11 million.

It may be difficult to see how Edelteq can turn its fortunes around given the current state of its financial situation.

But the company is positive on its outlook buoyed by semiconductor industry, which is expected to grow this year, on the back of resilient automotive market and the generative artificial intelligence wave.

Perhaps investors are starting to look at this counter given that it has not seen a bull run compared to its peers.

This counter will offer an opportunity for investors to make some decent returns on its investments.

Related Stocks
Market Buzz
More articles on The Daily Pulse of Bursa Malaysia
KJTS has been having an incredible run

Created by zaclim | Nov 13, 2024

KJTS Group Bhd Is having a positive upturn with its share price likely to surpass its high of 85 sen.

KPJ Healthcare showing upward trend, supported by better financials

Created by zaclim | Nov 11, 2024

Moving forward, the healthcare operator plans to expand regionally once the local market reaches saturation.

AGX may touch new highs, positive on growth

Created by zaclim | Nov 11, 2024

AGX Group Bhd has gone to new highs since making its debut on the ACE Market in February this year. How high can it go?

PMB Tech on the uptrend after hitting a low in October

Created by zaclim | Nov 07, 2024

PMB Technology Bhd seemed to be rebounding from its recent low in October. What are the factors that will catalyse its share price further?

Luck appears to be on Magnum Bhd’s side

Created by zaclim | Nov 06, 2024

Magnum Bhd is likely to show more upside in its share price, not only from a number of positive factors but its hidden gem in U Mobile. How high can the counter rise?

Takaful Malaysia on the uptrend after hitting a low in March

Created by zaclim | Nov 04, 2024

Syarikat Takaful Malaysia Keluarga has not been impressively in terms of share price movement. BUt there are opportunities to buy into the recent dip as the counters appear to be heading north.

Innoprise seeing new highs on elevated CPO prices

Created by zaclim | Nov 04, 2024

Global demand for palm oil remains resilient, particularly in key markets such as India, China and Pakistan.

Plantations outfit TDM rides on healthcare biz

Created by zaclim | Nov 01, 2024

TDM Bhd saw heightened interest in April following a RM5.7bil disposal of Ramsay Sime Darby Health Care, as valuations of private hospital operators in Malaysia was at a new benchmark.

UWC back on investors radar as it banks on expansion

Created by zaclim | Oct 30, 2024

UWC Bhd has lost much ground after touching a year high of RM3.83 last year. The counter has since seen its share price climbing and may just continue its upward momentum.

EP Manufacturing’s diversification may be a game changer

Created by zaclim | Oct 29, 2024

EP Manufacturing Bhd (EPMB) share price has been languishing in the past year, crashing to year low of 58 sen early September. With its move into vehicle assembly, will this help arrest its decline?

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment