Weicheng won a new 1.5 billion contract and was sought after by major brokerage firms

Before announcing the new contract after yesterday's market, Weicheng's stock price had already risen early. Yesterday, it had already surged close to 10% or 11 cents, and closed at RM1.24. Today, the stock also jumped 2.42% and opened at RM1.27; however, it was arbitraged, and eventually today's stock price fell back 3 cents or 2.42% to RM1.21.

However, major brokerage firms are still highly optimistic about Weicheng's prospects, including Hong Leong Investment Bank Research and Bank of Malaysia Investment Bank Research, which set the target price of the stock above RM1.40; while CIMB Research gave a high target price of RM1.68.

According to a study by Hong Leong Investment Bank, it is believed that Weicheng has proven its manufacturing capabilities. Coupled with improved consumer confidence and normalization of inventory levels for partner customers, overall sales showed a positive trend.

Furthermore, a customer who signed a manufacturing contract began recovering demand at the beginning of this year, injecting momentum into Weicheng Health's rebound.

Bank of Malaysia's investment banking research points out that while expanding its business, Weicheng also adopted streamlining measures to improve efficiency.

“Value chain optimization has made positive progress in the 3rd quarter of FY2024, and is expected to further boost earnings.”

CIMB Research emphasizes that it is optimistic about Weicheng Industrial in the Philippines, which has received this contract, and believes that the subsidiary can help strengthen Weicheng's market position as a vertically integrated EMS provider.

Analysts believe that Weicheng has experience in electronic manufacturing services (EMS) in Malaysia, China, Vietnam, and Indonesia, which can help the Philippine business gain a further advantage in the trade tension between China and the US.

Analysts further pointed out that although it was anticipated that Weicheng would win this manufacturing contract, the total amount of the contract still greatly exceeded expectations. Analysts had anticipated that the contract would generate RM0.8 billion in revenue over the next 2 fiscal years.