PANTECH (5125): Riding Global Export Waves and Automation for Growth
Summary (TL;DR):
- Research Firm: PHILLIP Investment Bank
- Subject: PANTECH / PANTECH (5125)
- Core Rating: BUY
- Target Price / Top Picks: MYR 0.89
- One-Liner: Pantech is poised for growth driven by resilient export demand, new market expansions, and operational efficiency gains from automation, supported by an attractive dividend yield.
Report at a Glance
PHILLIP Investment Bank released its latest research report on PANTECH on 8 July 2025, maintaining a “BUY“ rating with a target price of MYR 0.89. The core thesis of the report is that Pantech is poised for growth driven by resilient export demand, new market expansions, and operational efficiency gains from automation, supported by an attractive dividend yield, despite ongoing weakness in the domestic trading division.
Investment Thesis (The Bull Case)
- Point 1: Export demand remains resilient, particularly in the US despite President Trump’s proposed tariffs, bolstered by strong order flow from existing markets and incremental orders from data centre projects in the US and Mexico.
- Point 2: Pantech enjoys a competitive advantage in Europe due to lower anti-dumping duties compared to Chinese producers, coupled with successful onboarding of new Brazilian customers and active discussions with another potential buyer in Brazil.
- Point 3 / Key Beneficiaries: High manufacturing plant utilization (c.90%) and intensifying automation efforts are expected to boost operational efficiency and drive margins. Future capacity expansion, supported by Pantech Global’s listing proceeds, aims to capture robust global export demand, complemented by an attractive 9% dividend yield.
Potential Risks (The Bear Case)
- Risk 1: Lower-than-expected demand for Pipes, Valves, and Fittings (PVFs).
- Risk 2: Prolonged project delays impacting sales and revenue.
- Risk 3: Higher-than-expected operating costs, including a potential 3-4% net profit drag if a 5% Sales and Service Tax (SST) on imported stainless steel coils cannot be fully passed on or exempted.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to Feb) | FY26F | FY27F | FY28F |
|---|---|---|---|
| Revenue (RM mil) | 1,030.3 | 1,069.7 | 1,110.8 |
| Net Profit (RM mil) | 92.6 | 97.2 | 100.3 |
| EPS (sen) | 11.2 | 11.7 | 12.1 |
| DPS (sen) | 6.0 | 6.0 | 6.0 |
| Dividend Yield (%) | 8.8 | 8.8 | 8.8 |
| P/E Ratio (x) | 6.1 | 5.8 | 5.7 |
(Source: PHILLIP Investment Bank research report)
Valuation & Target Price
| Rating | BUY |
| Last Close Price | RM0.685 |
| Target Price (TP) | MYR 0.89 |
| Valuation Methodology | Derived based on a target 8x PE multiple on FY26E EPS. |
Analyst’s Conclusion
- Overall Stance: PHILLIP Investment Bank maintains a BUY rating on Pantech, expressing continued optimism on its growth potential.
- Key Catalyst/Strength: Strong global export demand, particularly from data center projects and new market entries, coupled with strategic capacity expansion and an attractive 9% dividend yield.
- Major Headwind/Risk: Potential impact from new tariffs (US) and domestic SST on stainless steel coils if exemptions are not granted or costs cannot be fully passed on, alongside risks of lower PVF demand and prolonged project delays.
- What to Watch: The upcoming 1QFY26 results (expected to be stronger QoQ), the effectiveness of automation efforts in boosting margins, and the group’s ability to navigate geopolitical tensions affecting freight costs and the subdued domestic O&G market.
Disclaimer: This article is a summary and interpretation of a research report published by PHILLIP Investment Bank on CAPITAL. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
