Following "solid" 3QFY2023 earnings and with margins seen to improve, Jarick Seet of Maybank Securities has maintained his "buy" call but with a higher target price of $1.08 from 93 cents.
For the three months to Sept 30, Aztech Global 8AZ reported earnings of $30.9 million, up 48.6% y-o-y. Reenue in the same period was up 16.9% y-o-y to $283.45 million.
Aztech has recently gotten its new plant at Pasir Gudang running and Seet, in his Oct 31 note, indicates that the new capacity can help the compay lift its margins for the coming FY2024.
As at 16 Oct 2023, Aztech has an order book of $322.7 million, with contracts not just from its key customer but also new wins from other new customers.
"Differentiating factors are strong R&D and design capabilities, on top of strong execution. We believe this can help sustain margins in near to medium term," says Seet.
With the better prospects, Seet has raised his FY2024 and FY2025 earnings forecast by 6.2% and 5.1% respectively, and thereby lifting his target price to $1.08, which is based on 8x FY24E earnings.
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Aztech now trades at just 6.6x earnings, versus 8-10x of its local peers.
In addition, Seet likes Aztech for its "attractive" potential dividend yield of 8.3% for FY2024.
Aztech Global shares traded at 93 cents as at 11.18am, up 3.33%.
