PETALING JAYA: ViTrox Corp Bhd’s outlook has improved, but there appears limited room for earnings upgrades at this juncture.
The improvement will be mainly driven by a robust pick-up in demand across key end-segments.
This is both in its main operating segments – automated board inspection (ABI) and machine vision system – despite geopolitical turbulence, said CGS International (CGSI) Research.
It is enhanced by product competitiveness, especially in AI-driven industries supported by research and development spending 10.4% of the first half of financial year 2025 revenue versus the financial year 2021 (FY21) to FY24 average of 8.8%.
This gives CGSI Research greater comfort in the group’s ability to deliver its expected FY25 to FY27 earnings compounded annual growth rate of 24.1%.
CGSI Research raised its target price to RM2.93 from RM2.10 a share. It retains its “reduce” call on the stock.
However, it sees limited room for earnings upgrades at this juncture given the de-rating catalysts of lingering macro risks (weaker US dollar versus ringgit, possible US semiconductor tariffs), which could dampen improved sentiment.
This is especially so after the stock’s 64% rally from the year-to-date low on April 9.
CGSI Research said at current levels, valuations look stretched at 47.3 times FY26 price-to-earnings ratio, 52% above its 10-year mean of 31.1 times.
The upside risks cited include faster-than-expected demand recovery, potential US semiconductor tariff exemptions.
It expects ViTrox’s electronics manufacturing services-focused ABI segment revenue in the third quarter of financial year 2025 (3Q25) to be on par or marginally better than RM111mil in 2Q25.