PETALING JAYA: Analysts are collectively bullish about the prospects of Main Board-bound Feytech Holdings Bhd, highlighting its strong past performance that is leading to a bright outlook moving forward.
Mercury Securities Research lauded the manufacturer of automotive seats’ strong growth prospects, amid recent client wins, while drawing attention to the group’s three-year revenue compounded annual growth rate (CAGR) of 38.6% between the financial years ending 2020 to 2023.
In a note published yesterday, the research house said: “Recent agreements with new clients are expected to drive further growth, with anticipated substantial increases in automotive-seat production exceeding 100% over the financial years ending Dec 31, 2024 (FY24) to 2026.”
The research house believes these new partnerships will be more than enough to mitigate potential near-term headwinds for the automotive industry, in view of the impending implementation of fuel-subsidy rationalisation by the government that would likely result in slower car sales.The research house reported that at present, Feytech operates a plant in Kulim (KP1) with a floor area of 64,000 sq ft, which is almost fully utilised, presenting the group with a bottleneck in its manufacturing capability.
The company is, however, expanding its capacity.
“Upon transitioning operations to KP3 and the completion of KP2 by the fourth quarter of 2025, Feytech will have a much larger combined floor area of approximately 165,000 sq ft.
“As such, we anticipate this will help Feytech to achieve higher machine utilisation rates of 44% to 64% in FY24 and FY26, respectively,” said Mercury Securities Research.
In addition, it said Feytech is planning to establish a new manufacturing facility within the Automotive Hi-Tech Valley in Tanjung Malim, that is intended to increase its production capacity.
The research house said this would enhance Feytech’s offerings to local and other original equipment manufacturers (OEMs) in the Tanjung Malim area, while optimising lead times and delivery schedules compared to operations at the Kulim plant.
“With the completion of this facility, we believe Feytech is poised for additional revenue growth beyond FY26,” it said.
Meanwhile, Apex Securities Research said that Feytech’s experience in manufacturing automotive covers and its subsequent expansion into automotive-seat production will enable the group to offer a diverse set of offerings to automotive vehicle OEMs.
“This in turn grants the automotive vehicle OEMs the convenience of appointing Feytech to produce both seats and covers, as the group broadens its customer base by offering automotive covers to various market segments,” the research house said.
Besides Feytech, the research outfit is also positive on the local automotive-cover industry as a whole, projecting a two-year CAGR of 8% from 2024, reaching RM544.5mil in 2026.
Similarly, it said the automotive-seat sector in Malaysia is also expected to grow at a two-year CAGR of 6.7%, reaching RM4.1bil by 2026.
Both Mercury Securities Research and Apex Securities Research have placed “subscribe” calls on Feytech, with target prices of 95 sen and RM1.13, respectively.
Feytech is scheduled to make its debut on the Main Board of Bursa Malaysia on May 21, with an initial public offering price of 80 sen.