The research house said the group’s new PE multiple range is likely sustainable given the earnings upside risk from existing key customer, coffee maker Jura, and its new business prospects.
“Potential capital management initiatives should also keep investors interested in the stock,” it said in a note on Tuesday.
The research house maintained its Buy call on the counter with a higher target price of RM3.33.
It said the company’s stock price had re-rated after the recent second quarter results announcement, driven by management’s guidance of an improved outlook over the near term.
This, it said, was a marked contrast to its outlook and guidance over the past few years, which have been sombre – mostly expecting sales to be flat.
“We think that positive earnings risks are likely considering Jura’s confidence in growing its business in new geographical markets while gaining momentum in the office and professional segment (which could help in margin expansion).
“Meanwhile, we also believe that there is scope for Uchi to secure new products or/and customers, as management has continually been participating in trade shows and showcasing its abilities and offering cost-competitive solutions,” it said.