KUALA LUMPUR (July 23): Phillip Capital has maintained its 'buy' rating for Pantech Group Holdings Bhd (KL:PANTECH) at RM1.09, with a higher target price of RM1.42 (from RM1.35), and said it expects the company to report stronger earnings year-on-year for the first quarter ended May 31, 2024 (1QFY2025), with a core net profit forecast of RM24 million to RM27 million.
In a results preview on Tuesday, the research house said the improvement can be attributed to higher export sales volume, bolstered by the recent rally in nickel prices, which had risen above US$21,000 (RM98,233) per tonne, the highest since August 2023, when it stood at US$22,000.
The house said nickel prices saw a 30% increase from March to May this year, due to concerns over supply disruptions from New Caledonia, the world’s third largest nickel producer, coupled with sanctions being imposed by Russia.
“We believe this has led customers to hasten their restocking efforts in anticipation of further potential price increases,” it said.
Manufacturing capacity
Phillip Capital said Pantech had expanded its manufacturing capacity by 15%, with the addition of four new stainless steel production lines recently.
It said the new capacity had been operational since end-February, and is expected to accommodate the increasing export sales volume.
“We gather that Pantech has acquired a new factory, which will be converted into a warehouse for storing its manufacturing products.
“Pantech plans to list two of its manufacturing arms, Pantech Steel Industries and Pantech Stainless & Alloy, and aims to further increase its manufacturing capacity by 20% to 25%,” the house said.