Written by Maybank Investment Research
Monday, 18 January 2010 09:54
KUALA LUMPUR: Maybank Investment Research initiates coverage on NOTION VTEC BHD [] (NVB), which manufactures hard disk drive and camera barrel components, with a Buy and RM4.20 target price.
The research house said on Monday, Jan 18 it was projecting earnings growth of 28% per annum for the next two years and the stock is currently attractively valued. NVB is a leveraged play on rising outsourcing opportunities in the HDD and digital camera markets.
"Our target price is based on a 5 times FY11 EBITDA and 10x earnings. This is eminently achievable for a growth stock with superior ROEs (more than 20%) and margins but justified for a small cap stock currently with limited institutional following.
"Prospects are excellent for the PE multiple expansion, once shareholding is institutionalised and NVB is able to exploit multiple avenues for business expansion," it said.