Date of Report
Thursday, 03 October 2024
Broker Name
UOB Kay Hian
Continued Growth Momentum
Plover Bay has demonstrated strong revenue growth, with momentum continuing into the first eight months of 2024. The company’s revenue in July and August saw further acceleration, building on a 28% year-on-year (yoy) growth in 1H24. This growth is driven primarily by robust demand from key markets, particularly the United States and Australia.
Revenue Growth and Profitability Outlook
Plover Bay’s management is confident in achieving a 25% yoy revenue growth for the full year of 2024, despite facing a high comparison base from 2H23. The company is also optimistic about improving its gross margin in 2H24, supported by stable raw material costs and a favorable product mix, which are expected to drive higher profitability.
Positive Long-Term Growth Prospects
Looking ahead, Plover Bay remains well-positioned for sustained growth, with net profit projected to grow by 36% in 2024, followed by 22% and 19% growth in 2025 and 2026, respectively. The company is benefiting from strong demand in various verticals, particularly in maritime and public safety, alongside effective cost controls and operating leverage due to its asset-light business model.
Valuation and Target Price
Plover Bay is currently trading at 12.1x estimated 2025 price-to-earnings (PE) ratio and 10.1x estimated 2026 PE, which is below its historical mean of 12.6x during the 2018-2024 period. UOB Kay Hian maintains a “BUY” rating for Plover Bay, with a target price of HK$6.10, based on a 10-year discounted cash flow (DCF) model with a weighted average cost of capital (WACC) of 10.1% and a terminal growth rate of 2%.
Key Catalysts for Share Price Growth
Plover Bay’s collaborations with Starlink present a significant growth opportunity. Further developments in these partnerships are expected to positively impact the company’s performance and share price.
Timeline for Growth
The company’s growth trajectory is expected to continue throughout the second half of 2024, with potential new collaborations and expanding demand across its key markets. Investors should watch for further updates on Plover Bay’s strategic initiatives and its 2H24 performance.
Investment Outlook
Plover Bay’s consistent revenue growth, stable margins, and strong demand across multiple verticals make it a solid investment opportunity. The company’s asset-light business model and focus on cost control further enhance its long-term profitability prospects, making it an attractive option for investors seeking stable returns in the technology and communications sector.
