VITROX – Fundamental Analysis (23 Nov 2014)

VITROX Analysis:-

Excel – http://1drv.ms/1uqayE7

My View:-

– Fair value:
  – Absolute EY%:
    – Trailing:
      – FY13 (EPS: 0.104) – Fair value 1.73 (Fair Value Uncertainty: EXTREME)
      – R4Q (EPS: 0.175) – Fair value 2.91 (Fair Value Uncertainty: HIGH)
    – Forward:
      – FY14 (EPS: 0.18) – Fair value 3 (Fair Value Uncertainty: MEDIUM)
      – FY15 (EPS: 0.196) – Fair value 3.26 (Fair Value Uncertainty: MEDIUM)
    – EPS applied to reach the current stock price (2.61): 0.157
  – At 2.61, the market assumed EPS 0.157. 0.157 is achievable based on the current outstanding booking, but this also means the current price already factored in its superb trajectory growth.
  – VITROX is slightly undervalued.
– I believe that FY14 and FY15 will be a growth year for VITROX because of the recovery of global semiconductor industry and improving US, Japan and European markets.
– I still sees a lot of growth in Vitrox – the catalysts from Agilent’s exit in 2016 and competitive products should help it compete to get individual orders. But with the trend moving towards a single supplier, which provides the entire array of testing equipment that seamlessly talk to each other, Vitrox is currently being left behind. A substantial change in its internal R&D activity to innovate or potential acquisitions with talents or acquisitions with new product offerings to complement its existing portfolio, are the only ways for Vitrox to grow in the longer term.
– Although SEMI’s Sept preliminary semiconductor equipment industry’s book-to-bill ratio recorded the first dip below parity since Sept 2013 to 0.94, we are not overly concern and attributing it to seasonality effect.
– Gartner expects global semiconductor capital spending to be robust in 2015, growing 11.3% yoy to reach USD43.6bn.
– China’s enormous investment (Rmb1tr) into semiconductor industry may lead to potential multi-year high demand of ViTrox’s products.
– Incentives in the form of capital allowance on automation expenditure to encourage automation in the manufacturing sector as tabled in Budget 2015 would also spur demand for its products.

Latest Financial – Q3 2014 Financial Report (20 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1799725

At the time of writing, I owned shares of VITROX.

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