Wednesday, 9 November 2016
Dyson technology a boon to local electronics sector
UOBKayHian sees British firm charting strong growth
PETALING JAYA: British technology company Dyson Ltd’s recent game-changing technology and continuous product innovation will benefit the electronics manufacturing services sector in Malaysia, says UOBKayHian Research.
The research house, which has retained an “overweight” call on the sector, said the vacuum cleaner giant’s investments include the acquisition of Michigan-based battery tech firm Sakti3 last year and just six months ago industry experts revealed that Dyson could become the next Tesla Motors, as it was developing a new electric car.
“Proxies to the growth of Dyson include EG Industries Bhd, SKP Resources Bhd and VS Industry Bhd.
“But our top pick for the sector is VS Industry for its earnings visibility driven by strong orders from key customers,” said UOBKayHian in a report.
Dyson said last year it planned to invest ￡1bil in battery technology and bought Sakti3 for US$90mil, according to reports.
As part of Britain’s National Infrastructure Delivery Plan, Dyson has been given funding to develop a battery electric vehicle that will secure a ￡175mil investment and create over 500 jobs.
With more than 50 active research projects in thermodynamics, sensors, robotics and artificial intelligence, UOBKayHian said reports showed Dyson chartered a 20% year-on-year growth in earnings last year, driven by the company’s battery-powered purifiers, fans and vacuum cleaners.
While Asia outstripped Europe to become Dyson’s biggest market, Japan was now Dyson’s second-biggest market by sales and profit, followed by the United States.
“We believe Dyson will continue to chart strong growth earnings trajectory over the next few years, driven by notable launches this year, including the v8 cordless vacuum, supersonic hairdryer, pure cool link purifying fan and 360 Eye robot vacuum, among other products,” it noted.
To recap, in 2014, Dyson announced a four-year ￡1.5bil capex plan and targets to launch 100 new products by 2018.
UOBKayHian thinks that Dyson’s recently-launched hair dryer, which marked its entry into beauty products, saw strong demand and prompted the company to quadruple production volume for 2017.
The research firm believe suppliers with vertical integration (VI) status stood a better chance in grabbing more orders from Dyson as the supplier had more control over cost and quality in production.
“Dyson’s listed suppliers here, including VS Industry. SKP, EG Industries may see growing orders from Dyson.
“But, VS Industry, producer of printed circuit boards (PCB) and battery packs, is the only one that has been awarded the VI status and is able to provide integrated solutions from producing plastic parts and PCB,” said UOBKayHian.
It added that the stock was now trading at an undemanding 10.4 times 2017 forecast fully-diluted price-earnings coupled with potential upside from further contract wins from customers in the medium term.