Avi-Tech Electronics | Neutral
Sept 12 close: 34.5 cents Target price: 38 cents Broker: RHB Research, Sept 12
As Avi-Tech mainly provides burn-in services for chipmakers in the automotive sector, where there has been gradual and steady growth, we expect the burn-in business to continue to grow by 10-15 per cent per annum, and not be impacted by the slowdown in the semiconductor sector.
In H2 FY18, its engineering segment took a hit due to delays in customer projects and a slowdown in orders. Management believes the segment has hit a low already, and business will likely pick up from here with new customers. But it will likely take six to nine months to ramp up, and the engineering business will likely continue to be a drag on profitability in FY19 – albeit to a smaller extent. With a slowdown in the sector, we maintain “neutral” on the counter.