Mercury Securities has a “Buy” recommendation for QES Group Bhd with TP of RM0.66 based on FY23 EPS 3.3 sen based and peers average PE of 20.0x.
It said that it likes the stock for its attractive growth prospects, a strong presence in the Asean region, and stable recurring income.
It said that QES has a diversified base of more than 3,800 customers across the ASEAN region primarily from the semiconductor, E&E, Metal, and Automotive sectors.
It said that the company’s revenue stream is also well-diversified where each customer does not contribute more than 10% of total revenue. Moving forward, the company plans to expand its regional presence in China via QES Hong Kong.
The stockbroking firm said that the company has a consistent annual recurring income of approximately an RM40million via the maintenance and service of large equipment installed base which contributes approximately 25% to group revenue. The cash balance remains strong above RM79.4 million as of 31-Dec 2021, consistent net cash since FY20.
