PETALING JAYA: Pentamaster Corp Bhd
’s prospects for the year ahead are expected to be underpinned by high-growth segments of the semiconductor industry, such as artificial intelligence (AI) and medical manufacturing.
This comes amid the automation systems and services provider taking a guarded outlook for the first half of 2025 (1H25) due to the sluggish automotive sector.
According to RHB Research, Pentamaster revealed that there was continued weakness in the automotive segment, with the group’s order book growing only 5% quarter-on-quarter to RM420mil.
“Management, in its briefing, said it now projects that the sector will contribute 25% to 28% to overall 2024 revenue, with expected softness persisting into 1H25,” the brokerage said.
“Against this backdrop, Pentamaster is shifting its focus towards high-growth segments (such as advanced packaging within semiconductor manufacturing), viewing 2H24 as a transitional period,” it wrote in its report yesterday.
RHB Research maintained its “buy” call on Pentamaster, with a lower target price of RM5.10, compared with RM5.95 previously.
This came after the brokerage cut its earnings forecasts for Pentamaster by 8% for 2024, 14% for 2025, and 12% for 2026 on lower anticipated automotive sector contribution.
“Management noted a more cautious 1H25 outlook, largely due to a slower-than-anticipated performance in the automotive sector.
“Nonetheless, we remain optimistic on Pentamaster’s prospects, as it stands to benefit from the expansion of power semiconductor devices driven by AI advancements, and from medical manufacturing automation due to stringent industry standards,” it explained.
RHB Research pointed out that medical devices would remain primary revenue driver for Pentamaster at 45% to 48% of 2024 revenue.
“The group is working to expand its customer base in anticipation of a slowdown from its main client. New customers currently represent a relatively modest 10%-15% portion of the medical devices topline,” it said.
“In 2025, Pentamaster expects the segment to contribute 40% to 45% of revenue, with its key customer as the largest contributor.
“It is also seeing momentum from new customers and expects expansion plans from these clients,” it added.
Meanwhile, RHB Research noted that the semiconductor space showed signs of recovery with revenue growth in the third quarter of 2024, and is expected to represent around 10% of total 2024 revenue.
Similarly, the electro-optical industry is projected to sustain its growth momentum, contributing 10% to 12% to total revenue, it said.
