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 CORAZA 0240 CORAZA INTEGRATED TECHNOLOGY BERHAD to benefit from FDI, E&E demand in Penang, says RHB Research

Despite inflation challenges, RHB Research stated that supply chain issues and a potential slowdown in semiconductor demand, Coraza has indicated that there was no cancellation of orders from its customers.

KUALA LUMPUR: Coraza Integrated Technology is poised to benefit from Penang's robust foreign direct investment and electrical and electronic (E&E) ecosystem.

Despite inflation challenges, RHB Research stated that supply chain issues and a potential slowdown in semiconductor demand, Coraza has indicated that there was no cancellation of orders from its customers.

Most of its customers from various industries continued to see strong growth, moving into the second half of 2022 (2H22) and 2023.

"On a brighter note, Coraza is not experiencing major labour shortage issues as it has managed to secure more than 100 foreign workers, which will be coming in gradually.

"We also understand that the pass-through cost exercise-from the increase in material price and staff cost-is still ongoing and should be reflected gradually in the upcoming quarters," it said in a note.

Despite the slight delay in constructing its new factory, Coraza had rented an additional facility in Kulim, Kedah, and was looking to onboard a new customer that required a bigger structure.

RHB Research stated that Coraza has also indicated that new machines are expected to arrive at the rental site within six to nine months for capacity expansion.

"The new finishing line will enable the company to provide in-house finishing services for aerospace parts.

"This should allow it to save some logistic and packaging costs, which will lead to margin expansion," it said.

On a side note, Coraza did not rule out the option of acquiring rented facilities or new buildings to cope with robust customers' demand should there be an urgency and order certainty from these customers.

RHB Research added that Coraza's recent share price weakness presented a good buying opportunity for its strong growth outlook due to its various customers, such as its front-end semiconductor customer.

It was also supported by its aggressive expansion plans, focusing on high-mixed, low-volume and newer products and benefiting from a strengthening US dollar.

RHB Research has upgraded its recommendation for the stock to 'Buy' with a target price of 93 sen.

https://www.nst.com.my/business/2022/09/829946/coraza-benefit-fdi-ee-demand-penang-says-rhb-research
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