TT Vision – Riding on The Growth of EVs and Solar Energy

Automated machine vision solution provider specializing in optoelectronics and solar cells TT Vision (TTV) is a technology driven company that specializes in the development of automated machine vision solutions serving optoelectronics (LEDs), solar cells, discrete components, and IC sectors within semiconductor industry.

Riding on electric vehicles and solar energy

The main customers of TTV are involved in solar and electric vehicles (EV). TTV is set to benefit from the mass adoption and rapid development of solar energy and EV with their optoelectronic and solar inspection machine.

According to industry research, the global EV industry is expected to grow at a CAGR of 17.8% by CY27 while solar energy industry is expected to grow at a CAGR of 20.5% by CY26.

Expected to benefit from China’s reopening

TTV serves 2 key markets which are Malaysia and China. China has accounted for 73.45% of the Group’s FPE2022 total revenue.

“Following the easing of Covid rules in China and China’s government is focussed in providing impetus to build their domestic semiconductor eco-system, we are optimistic on the orderbook growth from China for TTV’s Wire Bond AOI machine,” says Apex Securities.

Strong R&D capabilities

The Group has the R&D capabilities to carry out product innovation and development which enable them to ensure business sustainability and competitive advantage. For instances, TT Vision has successfully secured 2 patents related to Solar Cell sorting and Inspection Methodology. In addition, TTV has obtained the first order for X-Ray automatic inspection equipment, and it is expected that the product production will begin in late 2023.

Strong technical expertise

The Group’s client base comes from strong and reputable company such as D&O, Customer A (German company focusing on sensor technology, visualization, and treatment by light) and the ability of TTV to involved in Interdigitated Back Contact (IBC) Solar Cell (with more complicated than AI-BSF) has proved the technical expertise of TTV lead to a competitive advantage.

Financial Review and Outlook

TTV recorded a stellar revenue performance from FY19 to FY21.Revenue grew at a CAGR of 31.71% while net profit turned from a loss making in 2019 into RM 8.3m of profit in 2021, mainly due to the mass development of electric vehicles and solar energy.

“We expect the revenue to grow by 19% YoY in FY22F and then further grow 13% YoY and 16% YoY in FY23F and FY24F respectively underpinned by the positive outlook of the industry and benefiting from China’s reopening.

“Our net profit forecast is a surge by 47% YoY in FY22F due to the stellar performance in Discrete component equipment from China followed by a 4% YoY growth in FY23F after taking account of the listing expenses and the slower global economic market outlook in FY2023,” says the analysts

Healthy balance sheet

As at 30 June 2022, TTV possessed net cash of RM0.7m with 0.15x of gearing ratio.

After IPO, TTV’s net cash position is expected to reach RM29.5m. The healthy balance sheet has formed a solid foundation for the Group continue engaging in R&D activities to stay relevant with technological developments and evolutions to strengthening its position in the industry.

“We derive a target price of RM0.54 for TT Vision Holdings Berhad. Our valuation is based on the 20x PER which is 15% of comparable peers’ average forward PE of 23.5x and TTVHB’s FY23F EPS of 2.7sen.

“Our target price of RM0.54 represents a 59% upside against the listing price of RM0.34.”

Key Risks

Dependent on major customers

The Group are dependent on certain major customers that collectively contribute a total of approximately 70.56%, 94.19%, 90.77% and 90.43% to the Group’s revenue for the FYE 2019, FYE 2020, FYE 2021 and FPE 2022 respectively.

Foreign exchange

The Group are exposed to the foreign exchange fluctuation risk as part of TTVHB’s revenue and cost (50 -60%) are transacted in USD