by ASILA JALIL / pic by TMR FILE
GREATECH Technology Bhd is expected to deliver a strong performance in financial year 2022 (FY22) driven by its electric vehicle (EV), solar and medical science segments.
Public Investment Bank Bhd (PublicInvest) noted that these segments have been identified as the growth drivers for the group in the next two years.
“Following the recent sell-down, we believe it is a good opportunity for investors to accumulate Greatech’s shares,” the investment bank stated in a note yesterday.
The bank maintained its ‘Outperform’ call on Greatech with an unchanged target price of RM7.70.
It noted that Greatech missed its FY21 orderbook target by RM68 million due to the delay in one of the EV battery production line systems purchasing orders due to clients wanting to make changes to the car designs.
Greatech’s management expects to receive the order by the first quarter of 2022.
The company’s management also targets an orderbook of RM500 million for FY22 compared to RM586 million it secured last year. A total of RM300 million or 60% of its orderbook is filled by EV industry orders while the remainder will be contributed by solar (RM100 million) and Greatech’s new segment — medical science (RM100 million).
“Management is confident to achieve a profit margin of at least 30%. It is worth noting that it had received full payments from Lordstown Motors Corp after fulfilling all the deliveries.
“Management prefers to focus on more established automakers and it is targeting at least seven to eight new EV US customers in passenger and commercial segments this year. Each contract size for the EV battery production line order will be worth at least RM20 million,” it said.
PublicInvest noted that Greatech’s orderbook for solar production line systems is expected to dwindle this year as the latest RM160 million contract is the final portion from its main customer following the new capacity expansion in Ohio and India.
Greatech also mentioned that it will focus on diagnostic and single-use variables for the medical science business, which will gain more attractive margins than the EV segment. Each contract size will be worth at least RM50 million.
Greatech’s Batu Kawan III manufacturing plant, which spans 265 sq ft, is expected to be completed by April this year and ready for occupancy in May.
“The group’s combined floor space will jump from 391,400 sq ft to 950,000 sq ft. It is still finalising the masterplan for the fourth plant, which will be sitting on a 4.7ha piece of leasehold land in Batu Kawan,” the investment bank added.