Results within expectations; maintain BUY
1Q22 results were within expectations as ViTrox’s flagship segments
continued to outperform, driven by the global semicon industry’s robust
demand in sectors such as 5G, EVs, IoT and automation. We maintain our
BUY call, TP (pegged to 41x FY23 PER, at +1SD to the 5Y mean) and
earnings forecast, pending mgmt updates later today. Aggressive monetary
tightening remains a key valuation risk, but with ViTrox’s dominant
position in the MVS space, exposure to key high-growth sectors and
improving operating leverage, we believe the premium valuation multiple
is both reasonable and warranted at this juncture; BUY.
A record first quarter
Excluding EIs totaling MYR0.2m, ViTrox’s 1Q22 core net profit came in at
MYR50.2m (+52% YoY, +4% QoQ). This was in-line with expectations at
24/25% of our/the street’s full-year earnings forecast. ViTrox’s 1Q22
turnover of MYR185.3m (+43% YoY, flat QoQ) was its best first quarter
performance on record, underpinned by a favourable sales mix and
sustained demand robustness for its flagship Machine Vision System (MVS)
and Automated Board Inspection (ABI) systems.
Bottom-line buoyed by tax writeback
1Q22 results were also lifted by a reversal of taxation provision for a
subsidiary that was granted pioneer status extension for an additional 2Y
by MITI, resulting in a tax writeback of MYR1.4m (1Q21: MYR1.3m taxes
paid). Notwithstanding potential material shortages/shipment delays, the
ABI and MVS segments (accounted for 53%/45% of total revenue in FY21
respectively) are likely to perform well for the remainder of FY22.
Encouragingly, ViTrox has a well-diversified geographical and customer
base that has largely kept it insulated from supply chain bottlenecks.
Sound industry prospects; healthy orderbook
We remain sanguine on ViTrox’s outlook as global semicon equipment sales
reached an ATH of USD103b (+44% YoY) in 2021 (per US-based SEMI),
underpinned by aggressive capacity expansion and a structural shift
towards HPC/IoT/5G applications. As shipment backlogs remain sizeable,
VLSI Research expects the market to grow by a further 22% in 2022.
ViTrox’s book-to-bill ratio of 1.1x as of end-Jan remains healthy, while a
strengthening USD should provide further tailwinds in the quarters ahead.