The share price of KCE Electronics Public Company Limited (SET: KCE) continued its decline for the second week after the disappointing 4Q21 earnings results and concerns over technical issues at the production site.
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.
The share price has fallen more than 19% from February 9, 2022 and 36% in three months.
Kasikorn Securities (KS) wrote in a note that the technical issue is expected to delay KCE’s 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. KS added that it foresees a downside risk to our 2022-23 earnings forecasts, and to consensus as well.
Capital Nomura Securities (CNS) warned short-term investors (1-3 months) to be cautious and should avoid KCE for the time being after the share price has decreased more than 30% in the past two month and the P/E ratio declined from 34x to 28x, which is lower than the average of 33x due to rising inflation and oil prices. The downside risks for short-term investors would be the technical issues that could have an impact on its performance in 1Q-2Q22. CNS lowered 2022/23F net profit estimate by 16% and 7%, respectively, to 2,663 million baht and 3,194 million baht.
CNS revised down KCE’s target price from Bt97 to Bt74 per share. The target price could be lowered to Bt60 and Bt45 if the net profit in 1Q-2Q22F missed the forecast.
Still, CNS recommended Trading Buy on KCE for mid-term investors (6 months+) and those who speculate share prices daily.
