PETALING JAYA: Genetec Technology Bhd’s memorandum of understanding (MoU) with Thailand-based Asia Precision Public Company Ltd (APCS) could open new opportunities for Genetec to expand its customer base in the energy storage system (ESS) business.

       This is in line with the customer diversification plan of Genetec, an integrated engineering solutions provider, which also designs and develops industrial automated equipment for high technology-related manufacturing companies.

       The company had signed the MoU with APCS to collaborate and conduct a feasibility study in relation to the potential development of a factory automation facility for ESS business in Thailand. The MoU would be for one year, or earlier, if Genetec and APCS decided to enter into a joint-venture agreement.

       CGS-CIMB Research said the MoU would provide an exciting opportunity for Genetec to participate in the growing electric vehicle (EV) ecosystem in Thailand and diversify its exposure beyond existing customers.

       Genetec machines

       “We see the MoU with APCS as opening up of new opportunities for Genetec to expand its customer base in the energy storage segment, which is part of the group’s customer diversification plan.

       “We also see exciting potential for Genetec to participate in Thailand’s EV ecosystem development, given that Thailand is aggressively pushing to become the EV production hub in South-East Asia,” it added.

       CGS-CIMB Research retained its “add” rating on Genetec, with an unchanged target price of RM4.15. This is based on an unchanged valuation of 40 times the estimated price-earnings ratio for 2023.

       “We see higher-than-expected order book replenishment, a rise in institutional funds’ holdings, expansion into new customers or verticals, and potential interest in Genetec as an environment, social and governance play as the potential re-rating catalysts for the stock,” it said.

       CGS-CIMB Research noted that the Thai government had established the National Electric Vehicle Policy Committee (NEVPC) in 2020 to accelerate the country’s national EV roadmap.

       “NEVPC recently launched its roadmap, which lays out the framework for Thailand’s EV development from 2021 to 2035 with the aim of transforming its existing automotive supply chain from internal combusting engine towards zero-emission vehicles,” it pointed out.

       NEVPC had set a target of over one million EVs to be on the road by 2025 and 16 million EVs by 2035.

       In addition, NEVPC estimated that the country would produce over one million EVs by 2025 and 18 million by 2035.

       “Overall, this is an exciting opportunity for Genetec to potentially supply automation solutions for ESS going into EVs and charging infrastructure,” CGS-CIMB Research said.