Vitrox Corporation Berhad

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by CGSI

AMINVESTMENT TOP PICKS 2025

Putting theory into practice

Coming off a blockbuster year, we take a more balanced approach for Malaysia equities in 2025. We believe market liquidity will still be healthy, as potential cash
received from a spike in privatisation activities and rising cash levels (as a % of AUM), will eventually have to be redeployed. However, due to the high base achieved in 2024, the key challenge for the year ahead is deciding what to buy. Our focus is on sectors that have been relatively unloved and those with strong structural thematics. Stock picking will also play a key role, as pockets of opportunities do exist, within sectors we are Neutral on. Our top picks are CIMB, Gamuda, KL Kepong, Sime Darby Property and Vitrox. Mimicking our views, we are excited to introduce AmResearch’s model portfolio, a tool designed to instil accountability, by empowering clients to track our recommendations.

$VITROX / 0097 (VITROX CORPORATION BERHAD) $SUNCON / 5263 (SUNWAY CONSTRUCTION GROUP BERHAD) $MFCB / 3069 (MEGA FIRST CORPORATION BERHAD)

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by CGSI

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by HLIB

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by Maybank

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by HLIB
HOLD – TP RM2.92

" Flattish guidance”

Since the start of 2024, we did not favour the semiconductor equipment/SPE/ATE subsector which ViTrox is part of and its earnings have disappointed over the past six quarters consecutively. After our Sell call, share price plunged near to our TP which is the lowest amongst peers. By summing the mid-points of its guidance and assuming flat sequential growth in ECS, 3Q24 sales could potentially be flat sequentially at RM137m but fall 9% YoY. As downside is <10% now, we upgrade ViTrox to HOLD with an unchanged TP of RM2.92. While we like its technology leadership and asset-light business model, we do not expect demand to recover in the short-term due to excess capacity in the supply chain.

Analyst:
Tan J Young
jytan@hlib.hongleong.com.my

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by CGS
Reduce – TP RM3.15

“Rising operational challenges"

■ 2Q24 results missed expectations due to weaker-than-expected margins on the back of wider discounts provided to customers and higher R&D costs.
■ 3Q24 revenue guidance implies only marginal improvement qoq due to challenges from rising competition and election overhang in the US.
■ Downgrade to Reduce with a lower GGM-derived TP of RM3.15 in view of the challenging outlook ahead and lofty valuations at 40.3x FY25F P/E.

Analysts:
Shafiq KADIR
shafiq.abkadir@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by Maybank
Sell – TP RM3.40

“2Q24: ABI softness weighs"

ViTrox 2Q24 performance underwhelmed as it struggled to keep abreast with challenging industry headwinds. Pending briefing updates later this morning, we maintain FY24-26E earnings and our TP of MYR3.40. Our TP is pegged to 33x FY25E PER, at -1SD to its LT mean. SELL maintained on less-than-favourable risk-reward and lofty valuations (currently trading at 41x FY25E PER; 17% 3Y fwd earnings CAGR).

Analysts:
Anand Pathmakanthan
anand.pathmakanthan@maybank-ib.com
Arvind Jayaratnam
arvind.jayaratnam@maybank.com

$VITROX / 0097 (VITROX CORPORATION BERHAD)
Research by HLIB
Sell – TP RM2.92

“Slower-than-expected recovery"

1H24 core net profit of RM46m (-32% YoY) was a miss. The deviation was due to lower-than-expected top line and EBITDA margin. Bill-to-book ratio inched up at 1.1x in Jul 2024. It is cautiously optimistic on 2H24 business prospects as the slower-than-expected economic recovery will lead to volatility and challenges ahead. The group is confident in achieving steady growth and improvements in the semiconductor back-end sector. Maintain SELL with lower TP of RM2.92. While we like its technology leadership and asset-light business model, we do not expect demand to recover in the short-term as the supply chain continues to operate with excess capacity.

Analyst:
Tan J Young
jytan@hlib.hongleong.com.my

$VITROX / 0097 (VITROX CORPORATION BERHAD)

$MPI / 3867 (MALAYSIAN PACIFIC INDUSTRIES BERHAD) $DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD) $PENTA / 7160 (PENTAMASTER CORPORATION BERHAD) $VITROX / 0097 (VITROX CORPORATION BERHAD)

$VITROX / 0097 (VITROX CORPORATION BERHAD)

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSVITROX CORPORATION BERHAD (VCB or Company)
- AWARDING A CONTRACT IN RELATION TO THE EARTHWORK, PILING & MAIN BUILDING WORKS FOR "CADANGAN MEMBINA 1 UNIT PUSAT LATIHAN DAN PUSAT PENYELIDIKAN INDUSTRI 5 TINGKAT SERTA 1 UNIT PENCAWANG TNB DI ATAS SEBAHAGIAN LOT PT 6145 (PLOT LAMA 323B) & SEBAHAGIAN LOT PT 6141 (PLOT LAMA 323C), PERSIARAN CASSIA SELATAN 10, TAMAN PERINDUSTRIAN BATU KAWAN, MUKIM 13, SEBERANG PERAI SELATAN, PULAU PINANG"

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Intention to Deal During Closed Period

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - SIAW KOK TONG

Changes in Director's Interest (Section 219 of CA 2016) - CHU JENN WENG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - SIAW KOK TONG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - CHU JENN WENG

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - YEOH SHIH HOONG

Changes in Director's Interest (Section 219 of CA 2016) - CHUAH POAY NGEE

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - YEOH SHIH HOONG

Changes in Director's Interest (Section 219 of CA 2016) - SIAW KOK TONG

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - CHU JENN WENG

NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : BONUS ISSUESVITROX CORPORATION BERHAD ("VITROX" OR "COMPANY")

BONUS ISSUE

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - DATO' SERI DR KIEW KWONG SEN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - SIAW KOK TONG

Changes in Director's Interest (Section 219 of CA 2016) - DATUK IR DR. AHMAD FADZIL BIN MOHAMAD HANI