QES Group Berhad

$QES / 0196 (QES GROUP BERHAD)
Research by PBIV

$QES / 0196 (QES GROUP BERHAD)
Research by PublicInvest

$QES / 0196 (QES GROUP BERHAD)
Research by Apex
Buy - TP RM0.855

"Performance in line"

• 2QFY24 core net profit at RM6.4m fell -7.4% yoy to RM6.4m, bringing 1HFY24 core net profit to RM8.9m came in line with our expectations.
• Looking ahead, anticipate better performance in 2H24, with a more substantial recovery expected in 2025, driven by industry-wide recovery.
• We maintain our BUY recommendation with unchanged target price of RM0.855 by pegging PE multiple of 20.0x to FY25F EPS of 4.3 sen.

Analyst:
Jayden Tan
kdtan@apexsecurities.com.my

$QES / 0196 (QES GROUP BERHAD)
Research by Public
Outperform – TP RM0.86

"Picking Up Speed”

Despite the slow start in the beginning of the year, QES Group posted a strong earnings growth in the second quarter, bringing 1HFY24 core profit to RM8.5m(YoY: -5.5%), which made up 38.2% and 40.6% of our and consensus’ full-year earnings forecasts, respectively. Underpinned by the strong orderbook of RM103m, we expect to see stronger earnings momentum in the second half. Maintain Outperform with an unchanged TP of RM0.86 based on 26x FY25 EPS. No dividend was declared for the quarter.

Analyst:
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

$QES / 0196 (QES GROUP BERHAD)
Research by APEX
BUY – TP RM 0.855

"Performance in line”

• 2QFY24 core net profit at RM6.4m fell -7.4% yoy to RM6.4m, bringing 1HFY24 core net profit to RM8.9m came in line with our expectations.
• Looking ahead, anticipate better performance in 2H24, with a more substantial recovery expected in 2025, driven by industry-wide recovery.
• We maintain our BUY recommendation with unchanged target price of RM0.855 by pegging PE multiple of 20.0x to FY25F EPS of 4.3 sen.

Analyst:
Jayden Tan
kdtan@apexsecurities.com.my

$QES / 0196 (QES GROUP BERHAD)
Research by RHB
Not Rated – Fair Value RM0.88

“Progressing Up The Value Spectrum"

MYR0.88FVpeggedto25xFY25FP/E,at20%discounttopeeraverage.The current below-peer valuation of 18x FY25F P/E (ex-cash P/E 15.7x) vis-à-vis a 2-year CAGR of 31% is undemanding for a growing semiconductor production equipment (SPE) player that has exposure to the front-end equipment. Demand-led recovery, diverse clientele, strong regional presence and healthy orderbook should drive QES Group’s earnings recovery and growth in FY24F- 25F, capturing opportunities in the new semiconductor upcycle.

Analyst:
Lee Meng Horng
lee.meng.horng@rhbgroup.com

Change in Remuneration Committee - PUAN MAZNIDA BINTI MOKHTAR

Change in Nomination Committee - PUAN MAZNIDA BINTI MOKHTAR

Change in Audit Committee - PUAN MAZNIDA BINTI MOKHTAR

Change in Remuneration Committee - MISS WONG PEK YEE

Change in Remuneration Committee - DR GUNASEGARAN A/L MUTHUSAMY

Change in Audit Committee - DR GUNASEGARAN A/L MUTHUSAMY

Change in Boardroom - DR GUNASEGARAN A/L MUTHUSAMY

Change in Boardroom - MISS WONG PEK YEE

Change in Nomination Committee - MISS WONG PEK YEE

Change in Audit Committee - MISS WONG PEK YEE

Change in Nomination Committee - DR GUNASEGARAN A/L MUTHUSAMY

PUBLIC INVEST TOP PICKS 2H 2024

Push(ing) The Limits

Sentiment has been noticeably buoyant in the first half of 2024. This is more the result of a lack of “bad news” and/or market-shaking negative developments (i.e. geopolitical flare-ups, more acute supply chain disruptions, etc) however, rather than stark improvements in global economic conditions which have remained steady. Highlight of the first half has to be the artificial intelligence-driven fervour which, amongst others, saw the share price of industry-darling NVIDIA rocket >+170% higher year-to-date to catapult the company above Microsoft Inc. as the most valuable (public-listed) globally, at a point.

For 1H 2024, our view was for investors to “Stay the Course”, expecting that market conditions would be better, underpinned by healthier economic growth domestically (which has been fulfilled), a steadier earnings growth picture (which has been reflected) and traction from the various growth frameworks unveiled last year (relatively positively news flows), amongst others.

While risk premiums have risen with the risk-reward balanced skewed slightly to the downside, we think there is still sufficient reason to remain exposed to the local market, suggesting that investors “Push the Limits”.

We continue to favour names with multi-year growth stories to capture upsides from relatively steady global and domestic economic conditions. Kawan Food and QES Group are included alongside CIMB Group, Dayang Enterprise, Inari Amertron, Uzma, D&O Green Technologies and Mega First Corporation as picks going into 2H 2024. CCK Consolidated, IJM Corporation and QL Resources are replaced

$MFCB / 3069 (MEGA FIRST CORPORATION BERHAD) $QES / 0196 (QES GROUP BERHAD) $DAYANG / 5141 (DAYANG ENTERPRISE HOLDINGS BERHAD) $UZMA / 7250 (UZMA BERHAD) $KAWAN / 7216 (KAWAN FOOD BERHAD)

APEX Securities TOP PICKS 2ND HALF 2024...

Turning more selective and defensive.
Moving into 2H24, we advocate a more defensive stance to focus onto laggard plays. We continue to favour the construction sector in anticipation of more aggressive rollout in private and public infrastructure jobs as billings shift into higher gear. Meanwhile, we also like the property sector that is well positioned to capitalise onto development key mega transport projects that may uplift demand for property projects in selected vicinities. The technology sector remains in focus in view of the recovery in world semiconductor sales, leveraging onto the rise in AI industry, could computing and Internet of Things (IoT). We favour the healthcare sector, particularly gloves players which saw fortunes turning around with majority of the players returning to the black, while healthcare services providers and equipment manufacturers stands to benefit from the larger allocation under recent and upcoming Budgets.

$QES / 0196 (QES GROUP BERHAD) $MATRIX / 5236 (MATRIX CONCEPTS HOLDINGS BERHAD) $AME / 5293 (AME ELITE CONSORTIUM BERHAD) $TASCO / 5140 (TASCO BERHAD) $SLVEST / 0215 (SOLARVEST HOLDINGS BERHAD)

General Meetings: Outcome of Meeting

Change in Boardroom - MR HOH CHEE MUN

Change in Nomination Committee - MR HOH CHEE MUN

Change in Boardroom - ENCIK ADNAN BIN ZAINOL

Change in Remuneration Committee - PUAN MAZNIDA BINTI MOKHTAR

Change in Remuneration Committee - MR HOH CHEE MUN

Change in Audit Committee - MR HOH CHEE MUN

$QES / 0196 (QES GROUP BERHAD)
Research by PIB
Outperform – TP of MYR 0.86

“Riding on Semiconductor Recovery”

We initiate coverage on QES Group (QES) with an Outperform recommendation. Our TP of RM0.86 is pegged to 26x FY25 EPS, a 10% discount to the industry average of 29x, which we deem justifiable given the i) lower earnings base, ii) relatively small manufacturing earnings compared to its industry peers and iii) higher risk given the low entry barrier for its distribution division. Nevertheless, we think the distribution division can be a two-pronged sword for the Group as the business environment is recession-proof and there is low investment requirement while the turnover period is short. It can provide steady recurring cash flows for the company to drive its manufacturing growth going forward.

Analyst(s):
Chong Hoe Leong
chonghoeleong@publicinvestbank.com.my

$QES / 0196 (QES GROUP BERHAD)
Research by Apex
Buy – TP of MYR 0.855

“Looking ahead for meaningful recovery in 2H24”

1QFY24 net profit declined -47.3% yoy and -0.3% qoq to RM2.5m, dragged down by lower sales and margins due to an overall unfavorable product mix. Revenue for the quarter dropped 1.5% yoy and -9.4% qoq, attributed to lower contributions from the manufacturing segment and a seasonally weaker quarter.

Analyst(s):
Jayden Tan
kdtan@apexsecurities.com.my

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Titan Weekend Chart Reviews

$QES / 0196 (QES GROUP BERHAD)

Had been trending upwards here since forming a strong support around its RM 0.56+ regions over the past month.

For now as long as able to sustain above its RM 0.61+ immediate support levels, could continue on towards and beyond the RM 0.65+ regions soon for a bullish continuation pattern.

Support: RM 0.63, RM 0.61 areas
Resistance: RM 0.65, RM 0.67, RM 0.685 areas