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This article first appeared in The Edge Financial Daily on April 22, 2019

Success Transformer Corp Bhd
(April 19, 94 sen)
Initiate coverage with add and a target price of RM1.39:
Success Transformer Corp Bhd is involved in the design, manufacturing, and sales of: i) electrical apparatus, specialising in low-voltage transformers; ii) industrial lighting; and iii) process equipment. Apart from being an original equipment manufacturer, it also owns various well-known brands like Nikkon, QPS, and SES. In the first half of financial year 2018 (FY18), 78% of its revenue was from the transformer and lighting divisions, with the remainder from its process equipment segment.


Success Transformer is set to make a mark on Malaysia’s street lighting market with in-house-developed flagship products — iLCS and Trimax. iLCS is a smart street lighting system that links all the lights via Internet of things network. This allows better monitoring and control of street lights to ensure cost efficiency and traffic optimisation. Trimax is a multifunctional street lighting product that combines smart light capabilities with multiple value-adding functions — public security supervision and wireless network application.

Housing and Local Government Minister Zuraida Kamaruddin has stated that the government plans to replace street lights nationwide with LED in stages starting from September 2019. According to the minister, currently 80% of street lamps in Malaysia are not LED-based. Our estimates indicate that a minimum of 872,269 street lights may be changed under this initiative. In our view, Success Transformer is set to benefit from Malaysia’s initiative to adopt more LED street lights.

We project Success Transformer to record a three-year (FY18-FY21) earnings per share compound annual growth rate of 31.5%, driven by higher sales of street lights locally and overseas, a well as better economies of scale. — CGSCIMB, April 18

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