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| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent strategic move sees a prominent player in automotive electronics deepening its footprint in next-generation technologies. On 12 September 2025, the company signed a Memorandum of Understanding (MOU) with Huizhou Foryou General Electronics Co. Ltd (ADAYO), a Chinese specialist in smart cockpit and smart driving solutions.
This collaboration is set to jointly develop, localise, manufacture, and market smart cockpit and smart driving products. Under the agreement, ADAYO will leverage its expertise to provide technology platforms, product development capabilities, and technical assistance. In parallel, the company will be responsible for the crucial aspects of localisation, manufacturing, and supply.
Strategic Focus and Market Expansion
Initial efforts stemming from the MOU will concentrate on localising infotainment and cockpit systems for selected Malaysian Original Equipment Manufacturer (OEM) programmes. This focus is strategically designed to prepare for a broader expansion into wider ASEAN markets, capitalising on the growing demand for advanced automotive electronics in the region.
This partnership marks a significant stride in the company’s ongoing transition into next-generation automotive electronics. It complements earlier joint ventures, such as those in mmWave radar for Advanced Driver-Assistance Systems (ADAS), further expanding its comprehensive product suite. The expanded portfolio now spans both the “sensor layer” (radar/ADAS) and the “cockpit layer” (IVI/domain controllers), solidifying its position as a Tier-1 partner in the automotive supply chain.
Aligning with National Automotive Agenda
The technology-driven strategy of the company closely aligns with Malaysia’s national automotive agenda, which prioritises localisation, high-value electronics manufacturing, and the adoption of Electric Vehicles (EVs). This strategic alignment positions the group to effectively capture long-term structural growth within the sector.
Analyst’s View and Outlook
Hong Leong Investment Bank (HLIB) views the MOU as a pivotal step, underpinning the company’s entry into a significant growth phase. HLIB maintains its BUY rating on the stock with an unchanged target price of RM2.40. This valuation is based on a 15x price-to-earnings (PE) ratio on mid-FY27 partially diluted EPS of 16 sen. The investment bank’s confidence is rooted in the company’s years of investment in engineering and technology, which are now poised to capitalise on structural shifts in Malaysia’s auto industry, including rising localisation, greater demand for high-value electronics, and accelerating EV adoption. Additionally, the company is set to benefit from global “China+N” supply chain diversification, resilient demand from key local players like Proton and Perodua, and expansion through high-margin electronics, exports, and strategic JVs.
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