Date of Report: October 25, 2024
Broker: CGS International

Overview

Uchi Technologies Berhad is a Malaysian company specializing in the design, manufacturing, and sale of electronic control modules. These modules are primarily used in automated coffee machines, biosensors, and other industrial and consumer electronic products.

Stock Performance

Uchi Technologies is currently rated as “Maintain Add” by CGS International, though its target price (TP) has been revised downward to RM4.30. Despite facing near-term challenges, the company remains a solid investment, supported by its attractive dividend yields.

Recent Developments

In a recent meeting with Uchi Technologies’ management, discussions centered around anticipated near-term weakness in the second half of 2024. This is attributed to softer sales in US dollars (USD) and adverse currency exchange rates, particularly the strengthening of the Malaysian ringgit (MYR) against the USD.

Financial Adjustments

CGS International has adjusted its earnings per share (EPS) forecasts for Uchi Technologies, lowering the expected figures for FY24-FY26 by 9-12%. These adjustments account for the reduced revenue growth rate in USD and the impact of the stronger ringgit. Despite this, the company’s fundamentals remain robust.

Dividend Prospects

One of the key highlights for Uchi Technologies is its strong dividend yield, which is projected to exceed 6% for FY24 through FY26. This makes the stock an attractive option for investors seeking stable income, even amid challenging market conditions.

Analyst Commentary

While there are near-term headwinds for Uchi Technologies due to currency factors, the company’s solid dividend payouts and stable business model offer investors a level of confidence. The “Maintain Add” rating reflects the view that, despite a lower target price, the stock still holds value for long-term investors, particularly those interested in income generation.

Source: CGS International Trendspotter, October 25, 2024.