AmInvest Research Reports

Author: AmInvest   |   Latest post: Fri, 15 Jan 2021, 9:57 AM


QES Group - Optimistic of uptick in manufacturing orders

Author:   |    Publish date:

Investment Highlights

  • We maintain our HOLD recommendation on QES Group (QES) with an unchanged fair value of RM0.21/share, pegged to an FY20F PE of 12x.
  • We increase our FY19F earnings slightly to account for higher orders in 4Q amid anticipation of a gradual pickup in orders for its manufacturing division as the group said that activities from semiconductor customers are moving upwards for the quarter. We keep our FY20F–FY21F forecasts unchanged.
  • We attended the group’s 3QFY19 analyst briefing with the following key takeaways:
  • 3QFY19 results highlights: 9MFY19 core profit declined 71% while revenue fell 11% mainly due to the slowdown in the global semiconductor industry affecting manufacturing revenue as QES’ manufacturing products are primarily used by semiconductor companies. This was despite recording higher distribution revenue. Group gross profit margin stood at 21% (vs. 24% in 9MYF18) due to a 103% decline in manufacturing gross profit despite distribution gross profit rising 6%. QES had also recognized an RM1.8mil impairment of trade receivables in 2QFY19. Malaysia was QES’ single largest market in 3QFY19, growing 20% YoY, making up 40% of group revenue. Asean ex Malaysia revenue dropped 20% while others also fell by 52% (Exhibit 1).
  • Outstanding order book of RM45mil as at September 2019 where RM35mil comes from its distribution division and RM11mil is for its manufacturing division.
  • QES has tested its precision tilting sensing (PTS) equipment with one of its customers who is interested to purchase 195 of these machines. The group has received the purchase order for 1 unit. With an ASP of US$20K per machine, sales potential for this order is ~RM15mil in 2020. However, we have not imputed this into our forecasts.
  • We continue to like QES for the potential in its manufacturing division and the resilience of its distribution division’s service & spare parts business. However, we are cautious on the slowdown in the semiconductor industry impacting manufacturing sales in the nearer-term and thus, recommend a HOLD on QES.

Source: AmInvest Research - 27 Nov 2019

Share this
Labels: QES

Related Stocks

Chart Stock Name Last Change Volume 
QES 0.305 +0.005 (1.67%) 11,336,300 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View Trading Signals and run Live Backtest
MQ Affiliate
Earn rewards with MQ Affiliate Program

457  490  616  543 

Top 10 Active Counters
 PRG 0.285+0.055 
 PNEPCB 0.42-0.08 
 XOX 0.105-0.005 
 AT 0.185+0.01 
 SEALINK 0.18+0.015 
 GPA 0.125+0.015 
 IRIS 0.405-0.01 
 JCY 0.515-0.07 
 MTRONIC 0.105+0.005 
 ASIAPLY 0.30+0.03 


1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!


2. Evidence that prove JP Morgan's Jeffrey Ng analyst report on Glove is irresponsible and materially full with unreliable data GillianTan Reviews
3. UNISEM (5005) - Super Powerful Technology Counter Bursa Malaysia Free Trading Education
4. AT Glove (0072) - Second glove factory (Step 5) Rubber Glove companies till year 2023
5. Daily technical highlights – (OCK, TGUAN) Kenanga Research & Investment
6. 1% left of Topglove shares to be shorted by JP Morgan and their foreign associates. Don't let foreign investors fool you to sell GillianTan Reviews
7. Gloves Market Revenue - CAGR 13% during period 2021-2026 Rubber Glove companies till year 2023
8. Gloves - Some Significant Problems with JP Morgan's Report Trying to Make Sense Bursa Investments