KUALA LUMPUR (Dec 31): BIMB Securities Research has initiated its coverage of ViTrox Corporation Bhd (KL:VITROX) with a 'buy' rating with a target price of RM5.20, citing potential valuation rerating driven by artificial intelligence (AI)-related demand.

The house suggests ViTrox's niche dominance in AI-integrated inspection platforms support the 25.3% upside from its current share price of RM4.15. 

The 'buy' call and target price of RM5.20 are based on 53 times five-year historical average forward price-earnings ratio pegged at forecasted 2026 earnings per share of 9.8 sen, BIMB said in a note on Wednesday.

ViTrox expects strong profit growth after muted earnings in 2024, with a projected three-year compound annual growth rate of 34% through 2027.

BIMB highlighted that ViTrox is emerging as a key structural beneficiary of the global AI and automation megatrend, backed by its leadership in back-end semiconductor inspection and as a high-precision partner of electronics manufacturing services and outsourced semiconductor assembly and test players.

According to the report, total turnover is projected to rise from RM552.3 million in 2024 to RM983.0 million in 2027.

The research house stated that the growth would be driven by higher shipment volumes in the automated board inspection (ABI) and machine vision system (MVS) segments and a richer product mix of high-value systems like the QXI AXI platform.

ViTrox recorded total revenue of RM552.7 million in the nine months ended Sept 30, 2025, with ABI contributing the largest share at 61%, followed by MVS at 38%.

BIMB sees ViTrox as a key beneficiary of Malaysia's National Semiconductor Strategy (NSS) as the company enters a strong growth phase supported by the launch of the WiX AI platform.

The AI-integrated company reportedly reinvests more than 10% of its total revenue back into research and development, including worldwide research and development sites in Penang, Boulder and Bend (the US), and Suzhou (China), allowing the company to maintain its first-mover advantage across product cycles.

Meanwhile, the research house highlighted tax risks as the company's pioneer status tax incentives expired in mid-2025.

"ViTrox is expected to pay a fixed dividend of 1.5 sen per share for financial years 2025 to 2027," said BIMB.