Stock Name: NOTION
Company Name: NOTION VTEC BHD
Research House: INTER PACIFIC
KUALA LUMPUR: Inter-Pacific Research Sdn Bhd has reiterated its outperform recommendation on NOTION VTEC BHD [] at RM3.17 and revised its fair value upwards to RM3.83 from RM3.78 based on diluted EPS of 35 sen and PER of 11 times.
It said Notion's management expects the company's revenue to grow by 6% quarter-on-quarter (q-o-q) and 18% q-o-q in the remaining quarters of FY10 emanating from camera and HDD.
The stronger growth in latter quarter could be attributed to seasonality, it said.
"Nevertheless, the management expects its EBTIDA margin would fall from 38.7% in 2QFY10 to 37% in 4QFY10 in view of higher contribution from the lower end margin HDD and also partly due to the start up and development cost of its Thailand factory.
"But their continuous effort to reduce cost 1) the purchase of Autic Mekki for RM3.4 million which translates to a 100% ownership (previously 40%); 2) recycling of aluminum scrap; 3) commissioning of new adonising plant in Klang will provide comfort to its margin," it said.
The research house said Notion would spend about RM120 million in FY10 for capital expenditure, of which, RM80 million will be used for its 2.5" base plate production with the objective to hit two million pieces by end FY10.
It said Notion was expected to raise the needed fund through private placement of RM40 million and the balance through borrowings, adding that borrowings is expected to increase from RM57 million in FY09 to RM110 million - RM 125 million in FY10 thus bringing their FY10 net gearing ratio to 0.54 times from 0.43 times in FY09.
Company Name: NOTION VTEC BHD
Research House: INTER PACIFIC
KUALA LUMPUR: Inter-Pacific Research Sdn Bhd has reiterated its outperform recommendation on NOTION VTEC BHD [] at RM3.17 and revised its fair value upwards to RM3.83 from RM3.78 based on diluted EPS of 35 sen and PER of 11 times.
It said Notion's management expects the company's revenue to grow by 6% quarter-on-quarter (q-o-q) and 18% q-o-q in the remaining quarters of FY10 emanating from camera and HDD.
The stronger growth in latter quarter could be attributed to seasonality, it said.
"Nevertheless, the management expects its EBTIDA margin would fall from 38.7% in 2QFY10 to 37% in 4QFY10 in view of higher contribution from the lower end margin HDD and also partly due to the start up and development cost of its Thailand factory.
"But their continuous effort to reduce cost 1) the purchase of Autic Mekki for RM3.4 million which translates to a 100% ownership (previously 40%); 2) recycling of aluminum scrap; 3) commissioning of new adonising plant in Klang will provide comfort to its margin," it said.
The research house said Notion would spend about RM120 million in FY10 for capital expenditure, of which, RM80 million will be used for its 2.5" base plate production with the objective to hit two million pieces by end FY10.
It said Notion was expected to raise the needed fund through private placement of RM40 million and the balance through borrowings, adding that borrowings is expected to increase from RM57 million in FY09 to RM110 million - RM 125 million in FY10 thus bringing their FY10 net gearing ratio to 0.54 times from 0.43 times in FY09.
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