Headwinds in the first quarter of 2024: Benjie Keda (01665.HK) achieved total revenue of RM170 million in the first quarter of 2024, an increase of 3.3% over the previous year, of which approximately RM72.83 million and RM97.09 million came from the Automated Inspection Equipment Business Division and the Factory Automation Solution Business Division. However, the Group's quarterly net profit decreased by 11.9% year-on-year to RM32.025 million, mainly due to i) declining gross margin in the automated testing equipment business segment, ii) rising labor costs, and iii) marketing of development costs.

Outstanding contribution from the Healthcare Business Segment: Thanks to contributions from major customers, revenue from the Healthcare Business Division grew by 3.1x year-on-year to RM7,854.7 million, accounting for approximately 46.0% of total revenue for the same period. The visibility of orders from important customers remained clear, contributing to nearly half of the order volume in the first quarter. We maintain the view that the Healthcare Division is the Group's main source of growth this year, and acknowledge that the Healthcare Business Division contributed a very high percentage this year. Furthermore, we anticipate that the revenue contribution of single-use medical devices will gradually be realized after the completion of Phase 1 and Phase 2 of Plant 3.

Other business segments are mixed: the electronics business division achieved a year-on-year increase of 47.8% in the first quarter of 2024, but we do not agree that this division will grow strongly throughout the year, mainly due to insufficient improvements in terminal product technology. Sales of testers used in ambient light sensors and proximity sensors are still the main source of revenue. Furthermore, the semiconductor business division and the automobile business division maintained a weak momentum. Among them, the automobile business division was affected by weak demand in the terminal car market, which led to a push for individual orders. However, we maintain confidence in the long-term development of new energy vehicles. Price wars and weak demand are short-term fluctuations. Cooperation between Chinese and European manufacturers may help mitigate increasing trade barriers. Furthermore, in the near future, we are likely to see KGD testers bring initial revenue to the Group and improvements to the automotive business division.

More patience is needed to wait for the next growth momentum: as Benjakeda (01665.HK) faced larger headwinds compared to expectations in the first quarter of 2024, including lower order volume and depressed profit levels, we cut the profit forecast for Panjikoda (01665.HK) by about 10%, while lowering the target price to HK$1.10 per share. The automotive business division is likely to take more time to recover, and the contribution ratio from the medical business division is higher than we originally anticipated. We believe investors will need more time to endure the next growth momentum. Among them, the medical business division will provide strong support to the group in 2024, and in the second half of the 2024 fiscal year, we are likely to see increased momentum brought by the completion of the third factory and the automobile business division.