KCE Electronics Public Company Limited (SET: KCE)’s share price has fallen further on Thursday trading, hitting a new low in 8 months, due to disappointment with MSCI’s latest round of rebalancing and technical problems delaying delivery.
At 12.30 hrs. local time in Thailand, the share price of KCE dropped THB2.50/share or 3.86% to THB62.25/share, with a trading value of THB2,317 million. The share price peaked at THB64.50/share and bottomed at THB61.50/share, dropping more than 5.00% to an eight-month low.
Analysts have a bearish outlook on KCE following the February 9, 2022 analyst conference and have reduced their target price, but have maintained a “BUY” rating.
Kasikorn Securities (KS) stated that KCE has been experiencing technical issues with the new machine that was installed since Nov 2021. The management said that the machine is unable to operate and the company is trying to fix the issues. This issue delays the start-up of future capacity at Ayutthaya and Rojana as well, because the team is focusing on the Lat Krabang plant. This should delay revenue growth by 1-2 quarters, while GPM will likely continue to be subdued from lower utilization and higher scrap rate, even with ASP hike by 3% at year-end 2021.
FSS International Investment Advisory (FSSIA) anticipated that KCE would suffer short-term pressure from technical issues with the new machine, delaying revenue growth by 1-2 quarters. As a result, FSSIA forecasted that KCE’s earnings would be lower in 1Q22 compared to the prior quarter but would resume their recovery path in 2Q22.
FSSIA cut its earnings growth forecasts for 2022 and 2023 to 6% and 16% YoY, respectively, and also lowered its target price to THB72.00 from THB100.00, while keeping a “BUY” recommendation.
KGI Securities (KGI) said that missing the schedule on adding new capacity pressured earnings, but the situation should improve in 2H22. Given the solid global trend in EVs, KCE’s strong 2022 earnings growth of 29% YoY, and share price upside of 24%, KGI maintained a rating of Outperform with an end-2022 target price of THB80.00, down from THB120.00.
DBS Vickers Securities (DBSVS) also trimmed its target price for KCE to THB67.00 and cut its 2022 earnings projection by 11% due to delays in adding new manufacturing capacity, which would result in lower margins and an increase in scrap rates.
Meanwhile, Krungsri Securities (KSS) said that no change to Thai shares in the latest round of MSCI rebalancing effective 28 February could result in selling pressure in KCE and COM7 due to earlier speculation these two counters would be added to the MSCI.
In addition to this, Country Group Securities (CGS) downgraded target price on KCE from THB103.00 to THB95.80, while Phillip Securities downgraded from THB101.00 to THB72.00.
