KUALA LUMPUR (May 8): Pentamaster Corp Bhd (KL:PENTA) fell on Friday as investors were disappointed by its weak first quarter and analysts cut their forecasts.
At least two analysts downgraded their recommendations for the stock post-results that were dragged by larger-than-expected losses at its healthcare operations. Earnings from the company’s mainstay automated test equipment business were also soft even with the semiconductor upcycle in full swing.
Pentamaster’s earnings face near-term pressure from its newly commercialised healthcare segment, Phillip Capital said in downgrading the stock to ‘hold’ from ‘buy’. Further, “we believe the earnings recovery story is largely priced in”, the house noted.
Shares of Pentamaster fell as much as 16 sen or nearly 4% to RM4.22. The stock was trading at RM4.28 at 11am, valuing the company that also sells customised robotics manufacturing systems at RM3 billion.
Pentamaster is still up by more than 40% from April as investors are betting on broader demand for artificial intelligence and high-performance computing to drive orders for its equipment that inspect semiconductor components to ensure functionality and screen for defects.
The consensus among analysts tracked by Bloomberg, meanwhile, is for little upside ahead. There are now six ‘buy’ and five ‘hold’ calls post-results with an average target price of RM4.39, implying a potential gain of less than 3% in the next 12 months.
For RHB Research, which maintained its ‘buy’ call, Pentamaster is still tracking the global semiconductor capital expenditure upcycle with growth at all three business segments.
“We continue to like the stock for the intensified semiconductor capex cycle and pivot to advanced packaging and artificial intelligence-driven automation solutions,” the house added.
On its part, Pentamaster expects its factory automation solutions business to contribute more than half of the total revenue for this year and overtake its mainstay automated test equipment business.
“The segment is anticipated to benefit from continued demand for automation solutions across the medical, consumer and industrial products as well as electro-optical segments,” Pentamaster said in an exchange filing on Thursday.