HLIB stays upbeat on DNEX (4456): DAGANG NEXCHANGE BHD's earnings prospects

HLIB stays upbeat on DNEX (4456): DAGANG NEXCHANGE BHD's earnings prospects

KUALA LUMPUR: Hong Leong Investment Bank research is bullish on Dagang Nexchange Bhd's (DNeX) prospects as it expects back-to-back quarterly earnings growth for the energy and technology services provider.

The research firm said is projects the earnings growth over the next 12 months due to surging product average selling prices, increasing wafer shipments and higher realised prices for Ping Petroleum due to soaring Brent crude oil prices.

For the upcoming 2QFY22 results, tentatively scheduled for release on Feb 25, HLIB expects core earnings to be significantly stronger quarter-on-quarter due to full profit contribution from SilTerra and higher brent crude prices.

Meanwhile, HLIB has gathered from checks that DNeX could be bidding for two more long-term agreements in 1Q2022.

"Based on our understanding, it would be somewhat similar to contracts that the group has nailed with ChipOne Technology and ILI Technology (Ilitek), where DNeX will be entering into a multi-year long-term wafer supply agreement with its clients.

"Currently, both the existing LTAs with ChipOne and Ilitek is taking up 65% of SilTerra’s capacity and from recent news flows, we gather that the group is planning to have c.80% of its capacity tied to LTAs," it said.

HLIB maintained its "buy" call with a target price of RM1.35 a share.

https://www.thestar.com.my/business/business-news/2022/02/10/hlib-stays-upbeat-on-dnex039s-earnings-prospects