KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) has discontinued its coverage of ECA Integrated Solutions Bhd, citing a challenging outlook due to weak global car sales.
ECA Integrated is a Penang-based automated manufacturing solutions provider.
The investment bank's final rating for the stock was "Underperform," with a target price of 16 sen.
"Investors should no longer depend on any of our financial forecasts for ECA Integrated Solution in making investment decisions, nor infer any adverse opinion as a result of our decision to cease research coverage," it said.
ECA concluded its financial year 2024 (FY24) with a net loss of RM7.8 million, a sharp contrast to the RM10.8 million net profit recorded in financial year 2023 (FY23).
The decline was attributed to a prolonged downturn in the machine manufacturing segment, and no dividend was declared for the quarter.
"Management is currently focusing on strengthening its core factory automation solutions business through a combination of cost control initiatives, process improvements and strategic realignments," the investment bank said.
PublicInvest noted that the slowdown in the global automotive industry, driven by strategic shifts and price wars, has led some automotive companies to scale back or delay their capital expenditure.
"The group is sitting on a net cash position of RM18.9 million, which we believe should be sufficient to withstand the current tough conditions for the next 2 years," it added.
The stock was down 5 per cent to 27.5 sen a share, giving it a market capitalisation of RM159 million.