KUALA LUMPUR: Northeast Group Bhd jumped as high as 9.0 per cent from its initial public offering (IPO) price of 50 sen on its debut on the ACE Market of Bursa Malaysia.
The stock hit a high of 54.5 sen before settling to 53 sen at 10.41am.
The share price opened 3 sen or 6.0 per cent higher from its IPO price.
Its trading volume rose to 123 million, making it the most active stock.
UOB Kay Hian Research has initiated coverage on Northeast Group Bhd with a "buy" rating with a target price of 88 sen, a 76 per cent upside from its initial public offering (IPO) of 50 sen.
The research firm came out with the target price based on price-to-earnings (PE) ratio of 28 times for the financial year 2025 which is which is at -1SD (standard deviation) below five-year average forward PE of semiconductor production equipment.
It said the precision engineering components manufacturer is expected to post a revenue and core net profit growth of 23 per cent and 39 per cent, respectively, in the FY25.
"The improvement is supported by of cyclical recovery and growing relevance in its customers' technological advancement."This is notwithstanding the expansion pipelines in the next three years which could double its capacity and floorspace," it said in a research note.
The firm also forecasta three-year revenue and core net profit compound annual growth rate (CAGR) of 13 per cent and 21 per cent on the back of better order loadings from its key customers across all segments in tandem with its capacity expansion.
According to UOB Kay Hian, the group's goals to double its floorspace and expand capacity up to 13 per cent will capture the next tsunami of growth.
"Despite the challenges posed by the industry downturn, Northeast has maintained an optimal utilisation rate of 65 to 73 per cent (two shifts) on its computer numerical control (CNC) milling machines in FY23 and financial period ended May 2024 (FPE24) driven by demand stickiness from its major customers."
"Northeast has also secured eight new clients in the photonics, electrical and electronics (E&E) and semiconductor sectors in FPE24 through existing customer referrals," it said.