CORAZA: Strong Earnings Beat Expectations on Robust Demand, Target Price Upgraded

A leading integrated technology firm has reported exceptional financial performance for the first nine months of its fiscal year 2025 (9MFY25), with core profit significantly exceeding market expectations. The strong results have led analysts at TA Securities to maintain their “BUY” recommendation and revise the target price.

Performance Review

For 9MFY25, the firm recorded a core profit of RM11.8 million, excluding an exceptional foreign exchange net loss of RM3.2 million. This figure surpassed both TA Securities’ and consensus full-year estimates, accounting for 97.2% and 85.0% of their respective forecasts. The positive variance was primarily attributed to stronger-than-expected demand, particularly from its semiconductor customers.

Year-on-year, 9MFY25 core profit saw a remarkable 20-fold surge to RM11.8 million from RM0.6 million in the previous year, while revenue increased by 61.2% to RM118.3 million. This robust growth also saw the core profit margin expand significantly from 9.2% to 10.0%.

However, the third quarter of fiscal year 2025 (3QFY25) experienced a temporary moderation in demand. Core profit for the quarter dropped 17.7% quarter-on-quarter to RM4.0 million, with revenue falling 6.0% to RM39.9 million. This dip was largely due to customers having built up inventory in the preceding quarter. Despite this, the company maintained a healthy balance sheet, ending 3QFY25 with a net cash position of RM10.3 million.

Future Outlook and Growth Drivers

Management remains highly optimistic regarding the business outlook. The life science and medical device segment is projected to sustain its growth trajectory, while the instrumentation segment is poised to become a key earnings driver. This growth is expected to be significantly supported by the accelerating global adoption of Artificial Intelligence (AI) and increasing application complexity across industries.

Investment Rationale and Risks

Following the better-than-expected results and an improved demand outlook, TA Securities has revised its earnings forecasts upwards for FY25, FY26, and FY27 by 22.4%, 6.1%, and 9.4% respectively, incorporating higher sales assumptions from key customers. Consequently, the target price has been tweaked upwards from RM0.66 to RM0.70, based on a revised PE multiple of 22.0x CY26F EPS. The investment bank maintains a “BUY” recommendation on the stock.

Key downside risks highlighted include the firm’s dependence on major customers, potential fluctuations in raw material prices, and the possibility of new semiconductor tariffs imposed by the US.