Supercomnet Technologies - Well-Equipped With Various Growth Components rhbinvest Publish date: Tue, 16 Aug 2022, 10:25 AM
FV of MYR1.80 based on 36x FY23F P/E. We like Supercomnet Technologies for its niche exposure to the medical and automotive component supplier space. Given the rising demand for healthcare products and services, as well as various technology breakthroughs in the global medical industry, we think demand for medical devices will continue to grow over the longer term. This company has no comparable peers. Our FV is based on a 36x P/E, given its historical P/E range of 35-38x during the pre- pandemic period.
Strong orders for medical devices to drive earnings growth. The high- margin medical segment will remain SCT’s key earnings driver. Overall pipeline orders for Edwards Lifesciences Corp and Ambu have increased, while production of the declotting device for Customer M has also started since July – monthly volume is expected to rise as production becomes smoother in 4Q22 after securing a sufficient supply of materials. Production of the IHS Syringe Infusion System will also start in October as the US Food and Drug Administration (FDA) approval and CE Mark have already been obtained.
Wire harness and fuel tank orders to expand to supply for another European car model. SCT is the only supplier of the wire harness and fuel tank for a European car model in the Asia-Pacific region. Apart from the existing three models, the company will also start supplying wire harness and fuel tank for another model of the same brand beginning 3Q next year.
Potential M&A opportunities to accelerate growth opportunities. We understand that management is exploring M&A opportunities within the region to further expand its medical device offering of the company. If the target company is transacted at a reasonable valuation, we think SCT’s earnings trajectory will be exciting, and this could potentially boost the company’s market cap and valuation moving forward.
Imminent transfer to the Main Board. The company is in the midst of seeking a transfer of its listing to the Main Board from the ACE Market. This exercise is expected to be completed in 4Q22. We believe this may help to lift investor interest on the stock – which may lead to a re-rating – since investable medical technology stocks are scarce on Bursa Malaysia.
Expect FY22F earnings to grow at 34%. Given the pipeline production, particularly for the medical segment, we estimate FY22F-23F earnings to grow at 34% and 20%. 1Q22 earnings already achieved MYR7.4m, and we think earnings in the coming quarters should be stronger QoQ, given production volume for most medical products is back-loaded. With the improvement in earnings, we believe DPS will also rise accordingly, maintaining a payout ratio within the 40% region.
Malacca Securities upgraded its TP from RM1.51 to RM1.94 within 3 days ! The main upgrade was it expect the company to double its profit from RM25mil in FY2021 to RM48mil in FY2024. It is rather difficult to find a company which can double its profit within next 3 years....Share price could be doubled easily within next 1 or 2 years too. Please advise me if you can find other similar companies can match SCOMNET performance.
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Posted by yesyesyes > 2022-08-15 11:25 | Report Abuse
come on baby .. jgn sangkut kat sana , plsss drop ..