KUALA LUMPUR (March 20): Greatech Technology Bhd (KL:GREATEC) has strong potential for long-term growth as it transitions into higher-value process automation, thanks to its recent acquisition of a distressed company at an attractive valuation, according to Maybank Investment Bank (Maybank IB).

The group's acquisition of Manz Slovakia SRO (MSSRO) for €1 million in February has given space for the company to move up its value chain from factory automation to process automation and mechatronics, Maybank IB said in a note on Thursday. MSSRO will serve as Greatech’s foothold in the European Union, catering to EU-based clients under the acquisition.

“As its fundamentals remain largely intact, Greatech is well positioned to capitalise on global industrial revolution 4.0 and factory automation trends,” Maybank IB stated while upgrading its rating to 'buy' from 'hold' on the counter, noting that the impact of US tariff uncertainties has largely been priced in.

MSSRO, previously a wholly-owned subsidiary of Germany’s Manz AG (MAG), became available for acquisition following MAG’s insolvency filing on Dec 20, 2024. The official vendor for the deal was the insolvency administrator acting on behalf of MAG.

MSSRO specialises in designing, developing, prototyping, fabricating, assembling, commissioning, installing and servicing production lines, with a focus on e-mobility and battery solutions. Additionally, it serves as a contract manufacturer for clients in the semiconductor packaging, medical and automotive industries.  

On the potential imposition of blanket tariffs on Malaysia, Maybank IB opined that Greatech may be able to pass on near-to-medium term marginal cost increases to its customers, leveraging force majeure caveats.

Greatech shares were not spared by the recent sentiment-driven correction in the technology sector, which saw the share price drop nearly 30% year-to-date. The stock has rebounded over the past trading sessions from its five-year low of RM1.30 on March 12.

At the time of writing on Thursday, Greatech’s share price was up seven sen or 4.35% at RM1.68, giving the company a market capitalisation of RM4.17 billion.

Currently, the company has six 'buy' calls and five 'hold' calls, with no 'sell' recommendations. Its 12-month target price stands at RM2.23, implying a potential 32% upside from the last traded price.

Its order book also remains healthy at RM785 million as of Feb 13, providing visibility for the next four quarters, Maybank IB said. Management is targeting RM900 million in new orders for the financial year ending Dec 31, 2025 (FY2025), with solar and e-mobility segments expected to be key contributors, it added.

Furthermore, Greatech’s medical segment is anticipated to record revenue growth of over 50% in FY2025.

Consensus earnings forecasts indicate that Greatech is expected to post a net profit of RM193.13 million in FY2025 on revenue of RM846.11 million, surpassing its FY2024 net profit of RM155 million on revenue of RM752.37 million.