KUALA LUMPUR (Feb 27): Shares in electronics manufacturing services provider Cape EMS Bhd fell on Tuesday to a new record-low after its earnings for the financial year ended Dec 31, 2023 (FY2023) came in below expectations.
The counter fell as much as 21 sen or 19% to 92 sen on Bursa Malaysia, before paring losses to hit 95.5 sen as of 4.15pm — still down 18 sen or 16% — with more than 58.1 million shares changing hands. In contrast, the benchmark FBM KLCI index rose 0.5%.
Cape EMS was listed in March 2023 following an initial public offering that raised RM233.73 million at 90 sen per share.
In a note on Tuesday, AmInvestment Bank Bhd said the group’s core net profit of RM47 million was below expectations — 8% below its forecast and 12% below consensus estimate — mainly due to higher-than-expected operating costs, especially depreciation and net finance expenses.
Nonetheless, three analysts covering the stock have assigned “buy” calls, with a median target price of RM1.68, Bloomberg data showed.
Looking ahead, AmInvestment expects Cape EMS’ earnings in the next three financial years to improve further.
“We made negligible changes to FY2024F-2025F earnings because the higher operating and financing expenses assumptions are offset by a three-year (2024-2026) profit after tax guarantee of US$8 million (RM37.1mil) from iConn Inc,” said the research house.
AmInvestment projects the group’s net profit to increase 16.96% to RM80 million in FY2025 from RM68.4 million in FY2024.
Net profit is also expected to climb further in FY2026, underpinned by multiple secular growth trends, particularly increasing adoption of 5G, electric vehicles (EVs) and electronic cigarettes (e-cigarettes) in the US market, according to the research house.
For FY2023, Cape EMS recorded a net profit of RM44.38 million, up 32.3% from RM33.54 million in FY2022, as revenue climbed 23.9% to RM542.84 million from RM437.95 million.
Its fourth quarter net profit fell 38.4% to RM5.50 million from RM8.93 million a year earlier, although revenue rose 25.0% to RM147.74 million from RM118.20 million in 4QFY2022.