KUALA LUMPUR: Shares in Pentamaster Corp Bhd
slid over 4% in early trade Friday after its results fell below consensus expectations.
The automation manufacturing and technology solutions provider fell 21 sen, or 4.29% to RM4.69 at 9.34 am. It has appreciated 3.07% so far this year.
In the second quarter ended June 30 (2Q24), Pentamaster’s net profit fell 15.9% year-on-year (YoY) to RM19.9mil or earnings per share (EPS) of 2.8 sen as revenue fell by 3% to RM171.4mil.
For the first half, it posted a 13% YoY lower net profit of RM39.3mil or EPS of 5.52 sen while revenue was flat at RM342.16mil y-o-y.
Phillip Capital said Pentamaster’s 6M24 core net profit of RM47mil was below the firm’s and consensus estimates.
It noted that the Ebitda margin was down 1ppts YoY to 22%, impacted by weaker operating leverage in the automated test equipment (ATE) segment, resulting from lower sales volume and higher R&D project costs.
“Overall results were below both ours and consensus expectations, accounting for 41% and 42% of the respective forecasts. The deviation against our forecast was due to the slower-than-expected recovery in the automotive segment,” it said.
Phillip Capital has trimmed its 2024E earnings forecasts by 12% to reflect the prolonged automotive segment recovery, and 2025–26E by 2%.
“We continue to like Pentamaster for its growth opportunities within the medical and EV segment. We maintain our BUY rating with a lower target price of RM6.10 based on the target 35x PE multiple on 2025E EPS. Key downside risks include prolonged market recovery and any unforeseen customer order delays,” it added.
Meanwhile, UOB Kay Hian (UOBKH) Research said Pentamaster reported a sequentially stronger 2Q24 core net profit of RM23.1mil, bringing 1H24 core net profit to RM40.2m (+6%) which accounts for 43%/36% of the firm/consensus full-year estimates respectively.
“We deem the results within our expectation as 1H typically made up 43-51% of its full-year earnings for the past three years. Note that 1H24 core earnings have been adjusted for the unrealised forex and provisions for slow-moving inventories,” UOBKH said.
It noted that Pentamaster’s 2Q24 orderbook stood at RM400mil (on a rolling basis), flat when compared with end-Mar 24. The reduced orderbook vis-a-vis the high base in 2Q23 (at RM605mil) was mainly due to softening demand in the automobile segment caused by a shift in consumer demand amid the market fluctuations and bipolarisation in the EV industry.
“We trim our 2024 and 2025 earnings forecasts by 3% per year. While 3Q24 could continue to see a sluggish demand recovery in the automobile and semiconductor segments, value could emerge on firmer signs of a recovery in end-24 on a favourable price point,” UOBKH said.
It has maintained its “hold” on the stock with a higher target price of RM5.30.
