TA Research said it estimated for every 5% appreciation in the ringgit, earnings for the manufacturer of steel fittings could decline by approximately 4.3%.
PETALING JAYA: Analysts say they expect Pantech Group Holdings Bhd
’s results for the second half of its financial year 2025 (2H25) will be impacted by the stronger ringgit against the US dollar.
The ringgit’s strength would put pressure on the group’s top line growth as its products become more expensive for foreign customers.
TA Research said in a report it estimated for every 5% appreciation in the ringgit, earnings for the manufacturer of steel fittings could decline by approximately 4.3%.
“A stronger ringgit against the US dollar would result in lower revenue and earnings before interest and taxes (Ebit), placing pressure on top-line growth, a trend already visible in this quarter’s results.
“Should the US dollar continue to weaken, headline performance may show further softness,” the research house noted.
Pantech recently posted a core net profit of RM64mil in 1H25, up 29.6% year-on-year. This came in at 64% of TA Research’s full-year estimate and 57% of consensus forecasts.
The improved performance was primarily driven by higher-than-expected export sales from its manufacturing plant, which posted a 23.4% quarter-on-quarter (q-o-q) revenue increase and a 10.6% q-o-q rise in Ebit.
“However, the headline figures were softened by the impact of a weakening US dollar,” TA Research noted.
Pantech Group is a specialist in the manufacturing and trading of pipes, valves and fittings and other components for the oil and gas sector.
Meanwhile, TA Research said Pantech plans to list its wholly owned subsidiaries in the manufacturing division, Pantech Stainless & Alloy Industries Sdn Bhd and Pantech Steel Industries Sdn Bhd, on the Main Market via a special purpose vehicle, Pantech Global by year-end.
“We make no changes to our earnings on this event, pending the completion of the listing exercise,” the research house said.
TA Research said Pantech Group would retain a 69.15% ownership stake in Pantech Global after the listing.
“Assuming an initial public offer price of 50 sen and a profit after tax of RM50mil, we estimate Pantech Global to list at an 8.5 times price-earnings ratio, implying a market capitalisation of RM42mil.
Existing Pantech shareholders will be entitled to shares at a ratio of one share for every 25 existing ordinary shares held, which represents 4.1% of the enlarged share base.
The research house said the listing is expected to result in immediate earnings dilution for Pantech Group, with an estimated impact of 1.8 sen per share, translating to a reduction of 14% to 16% in its financial year 2026 (FY26) and FY27 earnings forecasts.
TA Research noted the funds raised from the listing are anticipated to support future earnings growth through expansion, though the potential had not yet been factored into its current earnings projections.
The research house reiterated a “buy” call on the stock at a target price of RM1.17.
It added Pantech presented an attractive dividend play, offering more than 5% dividend yield for FY25 to FY27, supported by free cash flow yield of above 10%.
Meanwhile, Phillip Research said Pantech’s 1H25 core net profit of RM63mil missed its expectations
“We expect the recent sharp appreciation of the ringgit to impact 2H25 earnings and as such we cut our FY25 to FY27 earnings per share forecasts by 7% to 8%,” the research house said.
Phillip Research maintained a “buy” call on Pantech, but lowered the stock’s target price to RM1.30 from RM1.42.
The research house noted the key risks to its call included lower-than-expected demand for the group’s products, unforeseen project delays, and higher-than-expected operating costs.
