P.I.E Industrial Bhd
Outperform. Target price: RM6.75
WE understand that PIE, via referral from a key shareholder, has secured a new sizeable AI server client that will take up the entire Plant 6 (280k sq ft), its largest facility. We also understand that this is part and parcel of the key shareholder’s diversification strategy.
A fast-track project, the qualification processes will be completed followed by small production before the year is out, paving the way for mass production in 2025. Ultimately, Plant 6 will produce approximately one-third of the new customer’s global volume.
Separately, we understand that Plant 5 (approximately 100k sq ft) has been completed and is in the final stages of equipment installation. This entire plant will be dedicated to Customer A and is set to commence operations by the end of May, doubling the floor space allocation for Customer A, which currently occupies the entirety of Plant 3. The increased demand is driven by new model launches from Customer A, as well as a robust order pipeline, aligning with the optimism in the DeFi market.
The group has also successfully on-boarded four smaller customers with products related to: (i) drone device for light shows, (ii) diagnostic device for oral cancer, (iii) smart home, and (iv) industrial sensors. The drone device and smart home customer have begun production with the diagnostic device for oral cancer to follow in March. Contributions from these new customers are expected to collectively account for c.8%¦12% of total group revenue in FY24.
We raise our FY25F earnings forecast by 10%, lift our TP by 69% to RM6.75 (from RM4) and reiterate our OUTPERFORM call.