HLIB has maintained its BUY call on SAM Engineering & Equipment Bhd (SAMEE) with a target price of RM5.90, saying stronger Equipment performance should drive sequential earnings growth as the wafer-fab equipment (WFE) upcycle gains momentum.
The research house said 1QFY27 core profit after tax came in at RM13.3 million, up 129% quarter-on-quarter but down 5% year-on-year, broadly in line with its and consensus full-year forecasts at 15% and 17% respectively. Revenue increased 22% quarter-on-quarter to RM424 million.
The key bright spot was the Equipment segment, where revenue jumped 30% quarter-on-quarter to RM302 million on stronger semiconductor and hard disk drive demand. HLIB said the rebound was a positive surprise after several sluggish quarters and broadly aligned with guidance from a key WFE customer.
However, Equipment profit before tax margin remained subdued at 9.1% due to foreign exchange headwinds and higher operating costs, although HLIB expects this to improve as utilisation increases.
Aerospace remained the main drag. Revenue rose 6% quarter-on-quarter to RM122 million but the segment remained loss-making with a PBT margin of negative 7.2%, partly due to start-up and relocation costs in Thailand.
HLIB expects Aerospace profitability to improve as the relocation progresses, while Equipment should benefit further from the WFE upcycle. It sees customer ramp-ups, plant relocation cost efficiencies and margin recovery as key re-rating catalysts.
The stock price decreased by 0.23% to RM4.41, as of 2.54 pm.
