KUALA LUMPUR: Maybank Investment Bank Research says Notion VTech's 1HFY10 results tracked expectation with a stronger 2H outlook.

It said on Friday, April 30 that Notion VTech remains a growth stock with high scalability prospects.

"Our RM4.20 target price implies a total return of 31% before taking into account new business prospects," it said.

Maybank Research said the proposed 10% private placement and one-for-five free warrants will enlarge its share base by 32% and provide the funds for expansion.

It said the company's profits improved while margins expanded year-on-year (Y-o-Y). The 2QFY10 net profit grew 165% Y-o-Y on expanded EBITDA margin (+1.4 percentage points Y-o-Y), bringing 1HFY10 earnings to RM26 million (+123% Y-o-Y), on track to meet its estimates.

Notion VTech is a global high precision component manufacturer for the hard disk drives (HDD), camera and automotive industries.

"The underlying strength in 2Q was broad based. Camera operations led revenue growth (+126%Y-o-Y), fuelled by increased orders from Nikon, a recent major shareholder of the group with 9% stake, followed by HDD (+59%Y-o-Y) and auto segments (+317%Y-o-Y)," it said.