KUALA LUMPUR (Feb 26): Shares of Pentamaster Corp Bhd (KL:PENTA) dropped on Wednesday to their lowest in nearly three years after the automated test equipment company reported a weaker quarter.

Pentamaster fell as much as 32 sen or nearly 10% to RM2.98, its lowest since May 2022, within 10 minutes after market opened. The stock was trading at RM3.03 at 9.20am, set for its fifth straight day of decline.

Investors, however, should look beyond short-term weakness, analysts said, noting that net profit for 2024 came in within expectations after stripping out unrealised foreign exchange losses and other non-operating items.

The softness is expected to linger until June amid macroeconomic challenges and policy uncertainties, said RHB Investment Bank, which lowered its target price to RM4.81 from RM5.12.

Still, the research house kept the stock on ‘buy’ call, as it is optimistic on the long-term prospects of Pentamaster’s mainstay automated test equipment business, “driven by its diversified portfolio and growth in key areas”.

On Tuesday, the company reported that its net profit for the fourth quarter ended Dec 31, 2024 (4QFY2024) fell 32% year-on-year to RM14.16 million. For the full year, net profit fell nearly 27% to RM65.21 million — its lowest since 2018.

Shares of Pentamaster have lost 27% of their value since the year began, along with its peers in the technology sector, amid worries of escalating trade tensions between the US and its major trading partners.

A majority of analysts still favour the stock with seven ‘buy’, four ‘hold’, and no ‘sell’ calls. The average target price has fallen to RM4.57, according to Bloomberg, indicating a potential upside of up to 47% in the next 12 months from its last price.

The recovery in the automotive sector, which took longer than expected, has been reflected in the current valuation with the stock trading at 21 times the forward earnings, mostly below its five-year mean, according to Phillip Capital, which also kept the stock on ‘buy’ call.

“Any signs of a sustainable recovery in the automotive sector could serve as a strong re-rating catalyst for the stock,” the research house added.

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Pentamaster's 4Q net profit drops 32% on lower contribution from automated test equipment segment