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$CORAZA / 0240 (CORAZA INTEGRATED TECHNOLOGY BERHAD)

Good morning 🌿

*CORAZA (Maintain BUY, TP of RM0.48 based on 25x 2025 PE)*

• *Below expectations, but turning the corner after four quarterly losses.* CORAZA delivered a breakeven core profit of RM1.9m in 3Q24 (+7x qoq, +2.8x yoy), marking a turnaround from previous losses.

• Although the quarter was weighed down by significant realised forex losses, *the improved topline performance enabled the company to breakeven,* bringing 9M24 results back into positive territory with a cumulative core net profit of RM0.2m.

• *This recovery was driven by a rebound in demand from semiconductor customers* and enhanced operational efficiency, marking a key step forward in Coraza's journey toward sustained profitability.

• *Yoy, 9M24 revenue returned to a positive growth trajectory of 13%,* rebounding from a 16% decline in 1H24. This was driven by a stronger order ramp-up amid the semiconductor industry’s recovery and additional contributions from new product introductions (NPI).

• Excluding unrealized forex losses of RM1.8m, the group achieved a core net profit of RM0.2m, supported by improved operational efficiency.

• *Qoq, revenue surged by an impressive 46%* fuelled by the semiconductor industry’s recovery. As a result of better operational efficiency, the group recorded core net profit of RM1.9m after four consecutive quarter of sequential losses.

• *Seeing lights at the end of tunnel.* Coraza’s order on hand remains steady compared with the preceding quarter, with c.50% of the total orders coming from the semiconductor industry while 32% are coming from instrumentation.

• Meanwhile, the increasingly higher New product introductions (NPI) activities in the past few quarters have started contributing positively to total orders and revenue. Consistent sequential revenue improvements over the past three quarters indicate that the group’s recovery is on track.

• The current outstanding orderbook stands at RM60m, which is similar to last quarter’s quantum.

• *After model updates,* we recalibrate our 2024/25 earnings forecasts to RM2.1m/RM9.7m respectively to account for unprecedented forex losses.

• *Maintain BUY and a lower target price of RM0.48* (from RM0.58), based on 25x 2025F PE. Our target price implies 1.3x PBV which is at the lower range of its closest peers’ PBV range 5.1-5.3x.

Thanks.