Elsoft Research poised for recovery in the semiconductor sector
PETALING JAYA: Demand for automated test equipment has yet to recover and this will have an impact on Elsoft Research Bhd , whose earnings in the first quarter of financial year 2024 (1Q24) came in below expectations.

Elsoft is involved in research, design and development of test and burn-in systems and application-specific embedded systems solutions to the semiconductor, optoelectronic and automation industries.

Year-on-year, its 1Q24 core profit dropped 66.8% to RM0.9mil due to a margin squeeze and share of losses in an associate company.

Revenue, meanwhile, stayed flat at RM4.6mil.

Factoring in lower sales assumptions, TA Research is reducing its financial year 2024 (FY24) earnings forecasts for the firm by 27.9%. For FY25 and FY26, it has lowered its earnings forecasts by 2% and 1.7%, respectively. However, the research house said the one thing that stands out is the company’s strong balance sheet.

According to the research house, the company had “zero debt and a net cash position of RM96.7mil or 14 sen per share as of end-1Q24”.

“The group is still looking forward to seeing a recovery in 2024. We expect earnings to improve, especially in the second half of 2024, alongside an anticipated recovery in the global demand for semiconductors.”

It kept its “hold” call on the stock and has tweaked its target price lower from 59 sen to 57.5 sen based on 24 times 2025 earnings following the earnings-forecast revision.
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Demand for automated test equipment has yet to recover and this will have an impact on Elsoft Research Bhd, whose earnings in the first quarter of financial year 2024 (1Q24) came in below expectations.