Founded in 2001, TT Vision is principally involved in the development and manufacturing of machine vision equipment, as well as the provision of related products and services.
The group’s machine vision equipment is mainly used for the inspection of semiconductors including optoelectronics, solar cells, discrete components and integrated circuits, and in vision guided robotic equipment. Vision inspection is a critical process in the manufacturing of electricals and electronics products such as light emitting diode (LED) and solar cell components as it ensures a certain yield of acceptable products. Apart from inspection, the group’s machine vision equipment also includes functions such as testing, sorting, and reject handling.
TT Vision’s equipment is typically incorporated as part of its customers’ manufacturing line while some are standalone equipment. The main industry segments, which the group’s customers cater to include LED mainly for the automotive sector, solar cell for the solar photovoltaic (PV) sector, and discrete component and integrated circuits mainly for the automotive (electric vehicle) and consumer electronic sectors.
TT Vision was listed on the LEAP Market of Bursa Malaysia in 2019. In 2021, the group undertook a voluntary withdrawal from the Official List of the LEAP Market to facilitate its intention to pursue a listing on the ACE Market of Bursa Malaysia.
IPO Statistics. The IPO entails a public issue of 84.5mn new shares and offer for sale of 10.5 million existing shares. Collectively, they account for 20.3% of the group’s enlarged issued share capital.
TA Securities in its research coverage on TT Vision has stated its competitive advantages such as Proven Track Record, Established Relationship with Multinationals, R&D Capabilities, Experienced Management Team & Technical Personnel.
Future Plans and Business Strategies of TT Visions include:-
* Strengthen R&D Capabilities & Focus on Product Development – TT Vision’s business strategy is to continue engaging in R&D activities to stay relevant with technological developments and evolutions, as well as to develop new products and enhance existing equipment with the aim of strengthening its position in the industry.
* Marketing Activities – TT Vision intends to perform proactive marketing activities by participating in more conferences and exhibitions in 2023 and 2024. This is especially in foreign countries to enhance the group’s profile and broaden its coverage to other markets. Conferences and exhibitions taking place in 2023 and 2024 which the group has identified include those in China, Taiwan, Malaysia, Germany, and USA.
Outlook. According to an independent market research report by Vital Factor Consulting in the IPO prospectus, the near to medium term prospects of the semiconductor industry is expected to be subdued due to lower demand for consumer electronics such as laptops and personal computers coupled with inflationary pressures and lower global economic growth. Expectations for lower demand for consumer electronics follows the pent-up demand during the COVID-19 pandemic.
However, demand for optoelectronics and solar semiconductors are expected to continue growing, underpinned by the rising adoption of renewable energy including solar PV systems and the use of energy efficient lighting such as LED lightings. Thus, given that TT Vision serves customers from various industry sector including LED mainly for automotive sector, solar cell for solar PV sector, and discrete components and integrated circuits mainly for automotive
(electric vehicles) and consumer electronic sectors, the group is to an extent able to minimise the moderation in growth in any one end-user segment.
Valuation. At the IPO price of RM0.34/share, TT Vision is priced at a trailing PE of 19.1x CY21 EPS. As TA Securities assigns a target PE multiple of 20.0x against its CY23F EPS, it derives a fair value of RM0.60/share.
This takes into consideration TT Vision’s growth prospects (FY22F/FY23F/FY24F: +36.8%/+23.1%/+16.0%) backed by the rising adoption of renewable energy (RE) including solar PV systems and energy efficient lighting including LED lightings. Furthermore, we have also
taken into account TT Vision’s proven track record and established relationship with multinationals. Not Rated.
Key Risks relating to business and industry include dependence on major customers; absence of long-term contracts; inability to keep abreast with technological changes.