UOB Kay Hian Private Limited
Date of Report: September 8, 2025
Metasurface Technologies Holdings: Precision Engineering Growth, Aerospace Upside, and Robust Profitability Outlook

Introduction: Metasurface Technologies Holdings Positioned for Powerful Upside

Metasurface Technologies Holdings (8637 HK) is a precision engineering service provider headquartered in Singapore, specializing in build-to-print solutions for large-format precision components. With a strong foothold in the semiconductor equipment and aerospace industries, Metasurface is set to benefit from industry trends, favorable market conditions, and government incentives.
UOB Kay Hian initiates coverage on Metasurface with a BUY rating and a target price of HK$2.90, representing an impressive upside of 95.95%. The detailed analysis below covers Metasurface’s business segments, financials, valuation, and the competitive landscape.

Company Overview: Core Services and Market Position

• Metasurface Technologies Holdings provides one-stop build-to-print precision engineering services, including precision machining and precision welding.
• The company serves the semiconductor equipment and aerospace industries, offering large-format precision components designed for high-complexity applications.
• Singapore’s favorable geopolitical position and government incentives are boosting the local semiconductor precision engineering market, expected to grow at a CAGR of 13.4% from 2024 to 2028.

Industry Tailwinds: Semiconductor and Aerospace Opportunities

Semiconductor Supply Chain Growth

• Increasing chip fabrication complexity at advanced nodes for memory and logic is driving demand for additional mask layers, multi-patterning cycles, metrology, and inspection steps.
• This complexity requires more wafer fabrication equipment (WFE) and extended wafer processing times, boosting demand for Metasurface’s precision components.
• Singapore’s semiconductor precision engineering market is projected to grow at a four-year CAGR of 13.4% (2024-2028).

Aerospace Engineering: A Driver of Long-Term Growth

• Airline capacity shortages, production constraints, and global trade uncertainties have increased reliance on existing fleets.
• This dynamic is driving demand for maintenance, repair, and overhaul (MRO) services, where Metasurface is emerging as a competitive entrant.
• Aerospace business contribution to total revenue is expected to climb from 8.0% in 2024 to 19.8% by 2027.

Financial Performance and Outlook: Strong Growth Trajectory

Metasurface demonstrates a robust financial profile, with significant improvements in profitability, margins, and returns expected over the next several years.

Revenue Breakdown: Key Business Segments

Metasurface’s top-line growth is fueled by expanding contributions from both semiconductor and aerospace segments, with precision machining and welding at the core.

Profitability, Cash Flow, and Key Metrics

Metasurface’s profitability metrics and operational leverage are forecasted to improve sharply, with healthy cash flow generation and strengthening balance sheet fundamentals.

• Gross margins expected to climb from 34.1% in 2024 to 40.4% by 2027.
• Net margins forecast to rise from 8.5% in 2024 to 17.4% in 2027.
• ROE is projected to increase from 9.6% in 2024 to 25.6% by 2027.
• Net debt to equity ratio anticipated to fall from 36.9% in 2025 to -8.4% in 2027, reflecting improved financial health.
• Operating cash flow expected to grow, supporting dividend payments and strategic capex investments.

Valuation and Peer Comparison: Attractive Discount to Larger Peers

Metasurface’s closest peers include UMS Holdings, Grand Venture Technology, and Frencken Group, all trading at an average 2026F PE of 15.7x. Given Metasurface’s smaller scale and listing on the lower-liquidity GEM board, UOB Kay Hian applies a 50% discount, pegging the target price to 7.9x 2026F PE. This is in line with a DCF-derived valuation that factors in an elevated WACC of 19.0% due to additional risk premiums for market cap and liquidity.

Stock Data and Trading Performance

• Share price: HK\$1.48
• Target price: HK\$2.90
• 52-week high/low: HK\$1.63 / HK\$0.60
• Market cap: HK\$222.0m (US\$32.6m)
• 3-month average daily turnover: US\$25,700
• YTD price increase: 48.0%

Risk Factors and Disclosures

• Elevated WACC of 19.0% reflects extra risk premium for smaller market cap and low liquidity.
• Metasurface is listed on the GEM board, which generally has lower trading volumes and liquidity than main boards.
• UOB Kay Hian, its affiliates, and analysts have not disclosed any proprietary positions or material interests in Metasurface securities.

Conclusion: Metasurface Technologies Holdings Offers Significant Upside

Metasurface Technologies Holdings is set to capitalize on semiconductor and aerospace industry tailwinds, with a clear path to rising profitability, margin expansion, and cash flow generation. The company’s strategic positioning, robust financial outlook, and attractive valuation discount position it as a compelling investment opportunity for growth-oriented investors.
This analysis is based on the latest comprehensive research and financial projections, providing a strong foundation for investment consideration in the precision engineering and aerospace sectors.