In a research note, AmInvestment Bank (AmInvest) said earnings growth would be supported by a gradual improvement in its product mix skewed towards higher margin projects from the solar and life science segments, and higher operational efficiency.
It said the automated manufacturing solutions provider’s solar segment accounted for over 75% of total revenue in FY2023. It is also the principal contributor to the group’s substantial order book, reaching RM1.05 billion as of February 2024.
“Propelled by the ongoing expansion of its sole customer and the introduction of innovative products, the company is targeting a y-o-y flattish solar order book of RM400 million in FY2024,” it said.
The bank noted the burgeoning demand for industrial automation is intricately linked to widespread initiatives to establish energy-efficient solutions.
“Greatech has set its sights on securing a robust order book of RM400 million in FY2024 for the e-mobility segment compared to RM250 million in FY2023,” it said.
In the e-mobility segment, AmInvest said Greatech is actively pursuing partnerships with two automotive manufacturers based in Detroit, US, to secure targeted order books ranging from RM100 million to RM150 million.
“Our belief is rooted in Greatech’s potential to meet these goals by securing new projects related to the launch of new car models or existing customers which are required to redesign the production line systems for newer battery models,” it said.
The bank noted that Greatech is constructing its fourth plant, BK4, in Batu Kawan, Penang, with an investment of RM230 million with internal funds. It is expected to be completed by the first quarter of 2024.
It said the BK4 plant would cater for engineering, component handling and assembly needs, particularly for electric vehicle products from new and existing customers.
Greatech is also planning for an investment of RM60 million to acquire two additional plots of land covering a total of 8.1 hectares.
“The first plant will focus on precision-machining parts and sheet metal forming for fabrication works, while the second plant will be utilised for engineering design, component handling and assembling works for the life science segment,” it added.
AmInvest initiated coverage on Greatech with a “buy” recommendation and a fair value of RM5.67 per share.
Its share price was unchanged at RM4.67, valuing the group at RM5.86 billion.