KUALA LUMPUR (May 28): Rakuten Trade Research assigned a fair value that is about double Pentech Holdings Bhd's (KL:PENTECH) initial public offering (IPO) price, setting a target of 42 sen compared to the 20 sen offer price.
The 42 sen valuation from Rakuten is based on 16 times projected core earnings per share for the financial year ending Dec 31, 2027 (FY2027), matching the average multiple of peers of comparable size, according to its note on Thursday.
Rakuten justifies its bullish view with three key premises: an aggressive expansion pipeline, strong partnerships with multinational technology firms, and a robust balance sheet.
The research house projects Pentech to register core profit after tax and minority interest (Patami) of RM13 million for FY2026 and RM16.1 million for FY2027, recommending a "buy" rating.
The IPO, priced at 20 sen per share, implies a market capitalisation of RM124 million upon listing, with an enlarged share capital of 620 million shares.
Gross proceeds of RM34.4 million will be channelled towards establishing a new Security Operations Centre in Kuala Lumpur, upgrading the existing Operations Command Centre infrastructure, and expanding information and communication technology (ICT) service offerings including artificial intelligence-powered cloud and cybersecurity solutions.
Pentech operates primarily from Penang and Kuala Lumpur with a workforce of around 129 employees, the majority being engineers and ICT specialists.
The company has forged strong alliances with major technology players such as Dell Technologies, Microsoft, HPE, Lenovo, VMware, Fortinet, Sophos, Oracle, and Pure Storage. As of April 27, 2026, the group held a healthy unbilled order book of RM87.7 million, which supports near-term earnings visibility.
Pentech serves a diverse customer base spanning manufacturing, financial services, healthcare, education, telecommunications, and government-linked sectors.
Following the IPO, the company is expected to remain in a net cash position, bolstering its capacity to pursue higher-margin segments such as managed services and AI-driven cloud offerings.
Meanwhile, TA Securities arrived at a lower fair value of 25 sen per share by applying a 12 times price-earnings multiple to CY2027F earnings, highlighting the group's approximately 20-year track record in the ICT industry.
TA also emphasised Pentech's capability to deliver end-to-end integrated solutions and an experienced senior management team as supporting factors.
Pentech does not have a formal dividend policy, noted the analysts.