KGI Securities (Thailand) has upgraded its rating on Cal-Comp Electronics (Thailand) Public Company Limited (SET: CCET) to ‘Outperform’ from ‘Neutral’, raising the target price to THB 7.40 per share on expectations of a near-term earnings turnaround and improved clarity surrounding U.S. reciprocal tariffs.
CCET reported a 12.5% year-over-year and 9.1% quarter-over-quarter drop in revenue for the second quarter of 2025, largely due to uncertainty over U.S. reciprocal tariffs that persisted until early August.
Despite the revenue dip, gross profit margin reached 5.6% in the period, improving from 5.3% in the first quarter but easing slightly from 5.7% a year earlier. The margin uplift was underpinned by a greater proportion of high-margin products and lower fixed costs, with depreciation falling 21% year-on-year to THB 522 million.
With the tariff situation now resolved, both CCET and its clients have a firmer footing for production and sales planning for the remainder of the year. Notably, a major customer is poised to launch a new model starting in August, paving the way for a profit rebound from Q3 onwards.
KGI believes the impact of new reciprocal tariffs will be limited for CCET, even in countries with steep duties like China and Brazil, as their operations there are mostly tied to non-U.S. or domestic markets.
In the ASEAN region, CCET faces a 19% tariff rate, comparable with competitors, and a key client holds tariff exemptions for U.S. exports. The firm’s outlook is buoyed by clarity on tariffs, strong AI server and EV charger demand, and expanded factory capacity expected in the second half of the year.
Looking ahead, the analyst warns that currency volatility could present a headwind to profits from late 2025 into 2026, particularly amid expectations of U.S. dollar weakness. However, the brokerage firm believes CCET is well-positioned to manage the risk with hedging strategies.
KGI has trimmed CCET’s 2025 net profit projection, reflecting a THB 341 million net FX loss in the first half, but revised up the core profit estimates for 2025 and 2026 by 1% and 2% to THB 3.1 billion and THB 3.5 billion, respectively, as a result of stronger sales and margins.
