Mercury Securities said that it initiates coverage on Cnergenz Berhad with a BUY recommendation with a TP of RM0.66 based on FY23F EPS of 3.8 sen and a peers average PE of 17.3x.
It said that it likes the stock for its attractive expansion plans and cheap valuations, well positioned to leverage on the growing SMT manufacturing solutions industry in Southeast Asia which is forecasted by Providence to grow at a 2-year CAGR of 8% from 2022 to 2024. The target price represents a potential return of 40.0% from the current price
Cnergenz is one of the leading SMT solution providers in Malaysia, Thailand, and Vietnam, with the expertise to design, develop, assemble, configure, integrate, test and commission integrated production line systems.
It said that the company also maintains a healthy relationship of more than 12 years with its top 5 customers which contributes approximately 61% to revenue in FY21. The company commands a market share of 17.4% in 2021 for the 3 key markets and serves more than 113 customers worldwide.
The company has an order book of RM147million as of 31st May 2022, expected to be fully recognised within 2H22.
The stockbroking firm said that under the leadership of Group CEO Lye Yhin Choy who is responsible for the overall management and business operations of Cnergenz, the company was able to achieve a 3-year revenue CAGR of 9.0% from FY18 to FY21 (excluded customer K & H for FY18 and FY19), despite the COVID-19 pandemic in FY20.
