KUALA LUMPUR (June 24): After two years of decline, Pentamaster Corporation Bhd (KL:PENTA) will see an earnings jump this year onwards thanks to a new product line, said Maybank Investment Bank.
Demand for power semiconductors — specialised chips that convert and manage electricity driving motors, charging batteries, and powering devices — is also broadening from electric vehicles into data centres, the research house said in initiating a ‘buy’ call on Pentamaster.
Pentamaster should be valued at 37 times its forward earnings, “justified by its power semiconductor exposure, medical segment growth, and a steady earnings outlook”, Maybank IB said.
Maybank IB’s target price is RM6, the highest among 12 research houses covering the automated test equipment and factory automation company based in Penang. The consensus target price is RM4.63 based on the average of target prices of the houses tracked by Bloomberg.
Pentamaster rose about 2% to RM4.88 on Wednesday morning. The stock has recovered from its decline since the Iran war broke out at the end of February, and is now up about 26% year-to-date.
A nine-product advanced integrated circuit and packaging suite spanning silicon photonics and co-packaged optics will be the new earnings driver from 2027, said Maybank IB.
With mass production targeted for 2027, average selling prices and margins “well above legacy tools, the ramp-up could drive a stepped change in group earnings over our forecast period”, the research house noted.
Pentamaster could see a 13% earnings growth this year to RM81 million after the 15%-16% contraction in 2024-2025, according to Maybank IB’s estimates. All in all, the company could be looking at an average annual earnings growth of 24% over the next three years.