SFP Tech in for stronger performance in FY24

PETALING JAYA: SFP Tech Holdings Bhd, which posted a lower net profit of Rm9.1mil in the first quarter ended March 31, 2024 (1Q24), can expect a stronger set of results in the financial year 2024 (FY24).

UOB Kay Hian (UOBKH) Research said it expects 2024 to be a record year for the group as it moves towards high value-add equipment modules and complex piece part fabrication.

“Not only is the group involved in undertaking more advanced tasks such as assembly (as opposed to the predominant focus on parts in the first half of 2022), it has also gained much traction with customers in the front-end of line semiconductor, medical, renewable energy and electronics manufacturing services segments that offer better profitability,” it said.

The research house expects SFP Tech’s healthy order book to spearhead growth on palatable price/ earnings-to-growth valuation.

It said SFP Tech recorded a fiveyear revenue and net profit compounded annual growth rate (CAGR) of 46% and 43%, respectively, from 2018 and is on track to resume its growth momentum in 2024. As at end-feb 24, the group’s order book stood at Rm44mil.

“Following the brink of the semiconductor upcycle, which is spurring the front-end semiconductor demand, we believe there could be more traction in the upcoming order book loadings.

“We are forecasting a two-year revenue and core net profit CAGR of 32% and 42% (versus 25 times 2024 forecast price/earnings), on the back of better order loadings from its key customers in tandem with SFP’S capacity expansion.

“Note that the industries where its key customers are operating in are relocating their supply chains to Malaysia, which prompted the company to expand its capacity and improve its service offerings,” it added.

In 1Q24, the integrated engineering and automation solutions provider’s net profit dropped by 10% to Rm9.1mil from Rm10.1mil a year ago, while revenue decreased by 2.7% to Rm33.7mil from 1Q23. Earnings per share was lower at 0.38 sen from 0.42 sen previously.

Meanwhile, Hong Leong Investment Bank (HLIB) Research opined that SFP Tech is on track to register back-to-back record-high profits annually in FY24-FY26, thanks to positive contribution from EST Exhibit Automation Sdn Bhd, completion of Manufacturing Plant 3 and the addition of 41 new computer numerical control milling machines over the next three years.

This would add its number of machines and cumulatively increase the group’s maximum manufacturing production capacity by about 25.3% from 520.4 thousand hours per year to 652.1 thousand hours per year, the research house noted.