MORNING CALL:16/11/23

Phillip Capital has a good feeling about NationGate’s earnings

Transcript

00:00 As earnings season slowly heats up this Thursday, it is Nation Gate we are looking at, where

00:06 Phillip Capital has a buy call on the stock following its most recent third Q. It has

00:10 a RM1.80 target price, which implies a possible 48% upside.

00:16 Cliff Notes, third quarter revenue was stronger at RM166 million, predominantly driven by

00:21 a recovery in both networking and telecommunication and data computing segments.

00:26 In tandem with the stronger and higher consignment-based revenue, third quarter EBITDA margin increased

00:31 to 21%, which drove a higher CoreNet profit of RM19 million.

00:37 Philip Cap is keeping its earnings forecast unchanged on the expectation of a stronger

00:41 fourth quarter result performance.

00:43 It likes that Nation Gate is being a prime beneficiary of the trade diversion and is

00:49 strategically positioned in the key secular growth trends, namely 5G, AI data center and

00:55 electric vehicles, to drive a three-year net profit CAGR of 27%.

01:00 Risks to its call include prolonged weaker consumer demand, delay in new production introduction

01:06 and margin compressions.

01:07 Bloomberg data shows four updated calls on Nation Gate, all of them buys, with the target

01:11 price averaging out to RM1.78, which is 56 cents higher than its last close midweek.

01:17 [Music]