FY21: Decent but better days ahead
Lowering TP but maintain BUY
4Q21 results were in line with our/consensus estimates. We have introduced FY24E estimates, rolled forward our base year to FY23E and raised our FY22/23E earnings forecasts by 7%/16%. However, we lower our valuation peg to 41x FY23E PER, at +1SD to the LT mean (from 54x at +2.5SD), to account for growing interest rate cycle risks. Imputing for both, our new TP is MYR10.20 (-9%). ViTrox remains our top ATE pick, underpinned by its elevated order book and dominant position as a market leader in the machine vision space. Maintain BUY.
4Q21 results within expectations
Excluding EIs totaling MYR2.6m, ViTrox’s 4Q21 core net profit came in at MYR48.4m (+43% YoY, +13% QoQ), bringing 12MFY21 core earnings to MYR176.3m (12MFY20: MYR111.2m, +59% YoY). This was in-line with expectations at 96/99% of ours/the street’s full-year earnings forecast. YoY, 12MFY21 revenue surged 45% to MYR680m, on the back of a favourable sales mix as demand for its flagship Machine Vision System (MVS) and Automated Board Inspection (ABI) systems remained robust.
ABI segment set to drive future growth
ViTrox’s cumulative 12MFY21 core net profit of MYR176.3m was also a record, underpinned by favourable USDMYR forex rates and greater operating leverage, as the company’s book-to-bill ratio had also hit its
highest point in 5 years as of end-3Q21 at 1.4x (Fig. 3). ViTrox saw significant growth in the ABI segment in 4Q21 (accounted for c.50% of group turnover for 9MFY21) as it remains one of the global market leaders in the 3D vision space with both its products (AOI and AXI) being widely utilised by contract manufacturers. With increasing demand from EV and consumer electronic customers due to the complexity of PCB assembly and test processes in those respective industries, the ABI segment is likely to
be the primary driver of ViTrox’s growth in the years ahead.
Well-positioned to benefit from ongoing upcycle
Notwithstanding the negative sentiment shrouding the tech sector from the growing risk of accelerated monetary policy tightening, we continue to remain upbeat on the semiconductor industry’s prospects due to global chip shortages in the face of resilient demand. With exposure to key future growth industries such as 5G, EVs and AI, ViTrox stands to be a prime beneficiary of the upcycle as OSAT/EMS players continue to ramp-up production capacity in order to match the robust demand. Maintain BUY