KUALA LUMPUR (Aug 1): Pentamaster Corp Bhd’s (KL:PENTA) second-quarter net profit fell 15.87%, as its biggest revenue contributor — the automated test equipment (ATE) segment — recorded lower sales volume, higher employee expenses, provisions for slow-moving inventories, and research and development expenditure for certain projects.

The group's net profit for the quarter ended June 30, 2024 (2QFY2024) dropped to RM19.9 million from RM23.65 million in 2QFY2023, while revenue dipped 3.11% to RM171.37 million from RM176.88 million.

The Penang-based group specialising in ATE, factory automation solutions and smart control systems did not declare any dividends for the quarter under review.

According to Pentamaster, global manufacturers are adopting a cautious approach to capital equipment spending, impacting the group’s order book. Demand within the ATE segment remained subdued, it said. “In light of these conditions, the group encountered a contraction in its current order book during the period, with the replenishment and recovery of orders taking longer than expected,” it said.

For the first half ended June 30, 2024 (1HFY2024), net profit dropped 12.58% to RM39.28 million from RM44.93 million a year ago, while revenue slipped to RM342.16 million from RM342.19 million for 1HFY2023.

Pentamaster said it remains optimistic about the recovery and prospects of the ATE segment attributed to its diversified portfolio and segments' coverage. "The group is particularly optimistic about the expanding role of artificial intelligence (AI) in cloud and data centres, as this trend is expected to create significant opportunities for demand for the group’s test equipment used in advanced semiconductor packaging," it said.

It also noted the increasing adoption of silicon carbide-based power solutions across various applications, particularly in data centres and high-bandwidth memory chipsets, which is expected to generate an uptick in demand for the group's wafer-level burn-in testers and test handler solutions.

It also expects regulatory support, expansion of charging infrastructure, industry investments in capital expenditure, and increased consumer demand that are fuelling the electric vehicle market to drive substantial growth for the group.

“The recent positioning of Chinese carmakers in setting up manufacturing and assembly plants outside of China presents significant growth opportunities for the group to expand its customer base, and enhance its presence across different automotive sector regions. This development is particularly promising, particularly in Europe, where currently this region accounts for less than 10% of the group’s total revenue, indicating substantial untapped market potential for the group with its German office presence,” it said.

It has also observed increased momentum in the integration of automation with renewable energy — with solar manufacturers increasingly adopting automation technology to streamline the manufacturing process — and has received some orders from the industry.

Shares in Pentamaster closed up one sen or 0.2% at RM4.90 on Thursday, giving the group a market capitalisation of RM3.49 billion.