Kobay Technology benefits from semiconductor, E&E demand surge

KOBAY Technology Bhd’s core business from manufacturing will continue to contribute healthily as the group benefitted from surge in demand for semiconductor and electrical and electronic (E&E) industries, according to a local research house.

The company’s management expected the financial year 2023 (FY23) to be largely driven by the organic growth of the core business with a set target of between 50%-80%, according to a note released by the Hong Leong Investment Bank Bhd (HLIB Research) today.

“The new business segments will be an additional bonus for the group, namely the solar segment and electronics manufacturing services,” it said.

Kobay Technology is primarily involved in manufacturing and property. In the former, it manufactures precision components, tooling, automation equipment and fabricated structures for aerospace, semiconductor, E&E and oil and gas subsea global market sectors.

The note said Kobay Technology will focus on its core capabilities in supplying mechanical components for advanced data server (ADS), adding that the order visibility remained robust for the next three months. Kobay Technology secured an ADS project in late FY21.

At this juncture, it said the company was actively exploring new opportunities to utilise its readily available surface-mount technology (SMT) line.

“We gather that after further discussion with the customer, the SMT portion of the work has been put on a halt and Kobay Technology will focus on their capability of supplying the mechanical components,” it said.

“We understand discussions have been taking place with two to three customers and Kobay Technology is confident that it will be able to start utilising the capacity soon,” the note said.

On the solar segment, the research note said the group was in the final stage of preparation work for its venture into the manufacturing of aluminium frames for solar panels for renewable energy (RE) –related business.

It said Kobay Technology has completed the renovation and installation of the new 15-acre (6.07ha) plant dedicated for RE-related business, but experienced a “slight delay” for approvals from the authorities.

HLIB Research maintained a ‘Buy’ call with a lower target price of RM4.94 reflecting the downward earnings revision. – by TMR / Pic source: kobaytech.com