KUALA LUMPUR (June 20): AmInvestment Bank Research has initiated coverage on Feytech Holdings Bhd (KL:FEYTECH) with a “buy” rating at RM1.05 and fair value of RM1.32, based on FY2520F price-to-earnings ratio of 15x, on par with its KLCI market rating.

Feytech is Malaysia’s third largest automotive (auto) cover and seat supplier with solid supply contracts with Mazda, Kia and Proton as well as an expanding portfolio.

In a note on Thursday, the research house said the auto cover and seat industry is forecasted to grow at 2023-2025F compounded annual growth rate of 8.6% and 7.3%, driven by rising numbers of completely knocked down (CKD) car models propelled by the government’s policy to localise content.

It said Chinese car manufacturers increasingly use Malaysia as their gateway hub for the Southeast Asian region, which could open the door for more collaborations and supply partnerships.

“Feytech’s attractions are: (1) strong technical prowess with latest machineries enabling the delivery of products and services in a time-efficient and consistent manner, (2) the only one-stop domestic solution provider for auto seats and seat covers, (3) strategically-located operations next to clients’ facilities, which greatly aid delivery time and lowers distribution costs and (4) efficient operations that enable swift turnaround.

“Feytech is expanding its customer base and product portfolio, as the group’s top three clientele make up 80% of its 2023 total revenue, posing a high concentration risk.

“The company is currently in the process of onboarding three new customers and in preliminary talks with another leading Chinese automaker,” it said.

At the time of writing, Feytech rose 1.90% or two sen to RM1.07, with 71.58 million shares traded.