8 August 2025
Pentamaster Corp (PENT MK)
Well-Positioned For The Next Growth Phase; BUY
Lee Meng Horng
+603 2302 8115
lee.meng.horng@rhbgroup.com
| Share Performance (%) | YTD | 1m | 3m | 6m | 12m |
|---|---|---|---|---|---|
| Absolute | (7.9) | 11.7 | 42.4 | 2.7 | (12.8) |
| Relative | (2.2) | 10.9 | 42.5 | 5.3 | (10.1) |
| 52-wk Price low/high (MYR) | 1.90-4.61 | ||||
Pentamaster Corporation (PENT MK)
Source: Bloomberg
- Keep BUY and MYR4.25 TP, 11% upside. Management has guided for a potential single-digit revenue decline-to-flattish in FY25F as Pentamaster Corp undergoes a transition period. Efforts are underway to diversify its customer base and pivot towards next-generation technology growth drivers through various product and service offerings. We remain positive on PENT due to exposure to the recovering automated test equipment (ATE) segment and its pivot to various new growth verticals – at below mean valuation.
- 1H25 group revenue fell 19.2% YoY to MYR276.5m, mainly due to a significant contraction in the factory automation solutions (FAS) division attributed to timing differences in medical segment project deliveries and slower order conversion cycles. This was partly offset by a strong 25.2% YoY rebound in the ATE division, which delivered MYR178.5m in revenue – driven by demand from electro-optical clients and a pickup in test handler sales to semiconductor customers. Core net profit declined 30.4% YoY to MYR30.4m, weighed down by higher depreciation and costs related to its new plant, increased R&D expenses, and FX headwinds.
- FAS. The medical segment should improve given the stronger billing recognition and conversion cycle, and is expected to contribute approximately 45-55% of FY25F revenue, based on the current orderbook. However, this will normalise from the elevated base in FY24 as some expansion lines near completion. The group is actively pursuing upgrade orders from existing medical clients and expanding into new verticals, ie renewable energy, data centres, and healthcare automation. These initiatives align with growing opportunities arising from US onshoring trends.
- Recovery in the ATE segment is expected to sustain into 2H25F, supported by improving momentum in the semiconductor industry and automotive-related clients. Management observed that semiconductor players, particularly in the logic and power segments, have resumed capex, with strong orders anticipated into 2H25. Some project conversions may only materialise in 1H26. In addition, PENT is well-positioned to address market shortages in generic handlers and is developing higher-value test solutions, including wafer probing, substrate-level testers, IVR testers, and chiplet sorters – targeting advanced packaging and Al-driven supply chains.
- The current orderbook stands at MYR350m (0.56x book-to-bill), with potential upside in 2H25F from new project wins. The newly operational Campus 3 – three times the size of Plants 1 and 2 – will house FAS production activities and potentially opportunities in contract manufacturing services for clients using its test solutions, aiming to provide value-added services such as outsourced testing and material handling.
- We maintain our TP and earnings forecast, valuing PENT at 33x FY26F P/E (+0.5SD of its 5-year mean), inclusive of a 2% ESG premium. Key downside risks include slow orderbook replenishment, skilled labour shortages, and FX volatility.
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 692 | 623 | 603 | 715 | 823 |
| Recurring net profit (MYRm) | 88 | 82 | 77 | 90 | 98 |
| Recurring net profit growth (%) | 6.2 | (6.0) | (6.2) | 16.4 | 8.9 |
| Recurring P/E (x) | 31.11 | 33.10 | 35.28 | 30.31 | 27.83 |
| P/B (x) | 3.9 | 3.6 | 3.4 | 3.1 | 2.9 |
| P/CF (x) | 12.69 | 19.93 | 35.24 | 22.76 | 19.77 |
| Dividend Yield (%) | 0.5 | na | 1.0 | 0.5 | 0.5 |
| EV/EBITDA (x) | 15.73 | 20.25 | 19.54 | 16.03 | 14.23 |
| Return on average equity (%) | 13.4 | 9.0 | 10.0 | 10.8 | 10.7 |
Source: Company data, RHB
E Score: 3.0 (GOOD)
S Score: 3.0 (GOOD)
G Score: 3.2 (EXCELLENT)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis
Pentamaster’s total GHG emissions increased by 83% in FY24 mainly driven by the higher scope 2 emissions, in line with the increase in the purchased electricity consumption across the plants.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | na | na | 50 | na |
| Scope 2 | 4,900 | 4,579 | 7,038 | na |
| Scope 3 | 139 | 206 | 1,671 | na |
| Total emissions | 5,038 | 4,785 | 8,759 | na |
Source: Company data, RHB
Latest ESG-Related Developments
Pentamaster aims to reduce its overall GHG emissions intensity by 20% by 2030, with 2020 as the base year.
The group’s new Campus 3 will feature energy-efficient systems, including solar panel fittings, rainwater harvesting, LED lighting, zoning, and smart sensors to optimise energy.
ESG Unbundled
Overall ESG Score: 3.1 (out of 4)
Last Updated: 9 May 2025
E Score: 3.0 (GOOD)
The group does not partake in activities with a direct or significant impact on natural resources during its operations. To address potential climate change threats to communities, it has been steadily reducing its carbon footprint across its operations. The main source of greenhouse gas (GHG) emissions by the group is the consumption of electricity of machineries.
S Score: 3.0 (GOOD)
The company prioritises the well-being of employees who have significantly contributed to its growth. It promotes an open communication policy to maintain motivation and encourages engagement across teams, levels, and departments.
G Score: 3.2 (EXCELLENT)
Board characteristics are within the requirements stipulated by Bursa Malaysia, with half of the board consisting of independent directors and 33% female representation on the board. Pentamaster provides clear, timely, and reliable information that is compliant with Malaysia’s regulatory framework. Shareholder rights are well-protected.
ESG Rating History
Source: RHB
Financial Exhibits
Key drivers
- i. Stronger orderbook;
- ii. Recovery of automotive sector;
- iii. Semiconductor upcycle.
Key risks
- i. Slow replenishment of orderbook;
- ii. Skilled-labour shortages;
- iii. Unfavourable FX.
Company Profile
Pentamaster provides integrated and customised solutions, serving customers across industries sectors ranging from semiconductor, computer, automotive, electrical & electronics, pharmaceutical, medical devices, food & beverages, consumer electronics to general manufacturing.
| Financial summary (MYR) | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Recurring EPS | 0.12 | 0.12 | 0.11 | 0.13 | 0.14 |
| DPS | 0.02 | 0.04 | 0.02 | 0.02 | |
| BVPS | 0.98 | 1.05 | 1.12 | 1.23 | 1.34 |
| Return on average equity (%) | 13.4 | 9.0 | 10.0 | 10.8 | 10.7 |
| Valuation metrics | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Recurring P/E (x) | 31.11 | 33.10 | 35.28 | 30.31 | 27.83 |
| P/B (x) | 3.9 | 3.6 | 3.4 | 3.1 | 2.9 |
| FCF Yield (%) | 4.1 | (0.7) | (2.7) | 2.6 | 3.2 |
| Dividend Yield (%) | 0.5 | 1.0 | 0.5 | 0.5 | |
| EV/EBITDA (x) | 15.73 | 20.25 | 19.54 | 16.03 | 14.23 |
| EV/EBIT (x) | 17.71 | 24.37 | 24.02 | 20.47 | 18.52 |
| Income statement (MYRm) | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Total turnover | 692 | 623 | 603 | 715 | 823 |
| Gross profit | 207 | 178 | 178 | 214 | 244 |
| EBITDA | 159 | 128 | 139 | 168 | 186 |
| Depreciation and amortisation | (18) | (22) | (26) | (36) | (43) |
| Operating profit | 141 | 106 | 113 | 131 | 143 |
| Pre-tax profit | 141 | 105 | 113 | 131 | 143 |
| Taxation | (1) | (2) | (4) | (5) | (5) |
| Reported net profit | 89 | 65 | 77 | 90 | 98 |
| Recurring net profit | 88 | 82 | 77 | 90 | 98 |
| Cash flow (MYRm) | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Change in working capital | 68 | 5 | (53) | (39) | (38) |
| Cash flow from operations | 215 | 137 | 77 | 120 | 138 |
| Capex | (102) | (155) | (150) | (50) | (50) |
| Cash flow from investing activities | (110) | (146) | (150) | (50) | (50) |
| Dividends paid | (14) | (14) | (28) | (14) | (14) |
| Cash flow from financing activities | (39) | (49) | (28) | (14) | (14) |
| Cash at beginning of period | 421 | 491 | 449 | 352 | 412 |
| Net change in cash | 66 | (58) | (101) | 56 | 74 |
| Ending balance cash | 485 | 433 | 348 | 407 | 485 |
| Balance sheet (MYRm) | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Total cash and equivalents | 491 | 449 | 352 | 412 | 491 |
| Tangible fixed assets | 282 | 457 | 581 | 595 | 602 |
| Total investments | 40 | 29 | 29 | 29 | 29 |
| Total assets | 1,318 | 1,352 | 1,402 | 1,545 | 1,699 |
| Total liabilities | 312 | 271 | 240 | 271 | 301 |
| Total equity | 1,006 | 1,081 | 1,161 | 1,274 | 1,398 |
| Total liabilities & equity | 1,318 | 1,352 | 1,402 | 1,545 | 1,699 |
| Key metrics | |||||
|---|---|---|---|---|---|
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
| Revenue growth (%) | 15.2 | (10.0) | (3.3) | 18.7 | 15.0 |
| Recurrent EPS growth (%) | 6.2 | (6.0) | (6.2) | 16.4 | 8.9 |
| Gross margin (%) | 30.0 | 28.6 | 29.6 | 29.9 | 29.6 |
| Operating EBITDA margin (%) | 23.0 | 20.5 | 23.0 | 23.4 | 22.6 |
| Net profit margin (%) | 12.9 | 10.5 | 12.8 | 12.6 | 11.9 |
| Dividend payout ratio (%) | 16.0 | 0.0 | 36.8 | 15.8 | 14.5 |
| Capex/sales (%) | 14.8 | 24.9 | 24.9 | 7.0 | 6.1 |
Source: Company data, RHB
Recommendation Chart
Source: RHB, Bloomberg
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-08-07 | Buy | 4.25 | 3.83 |
| 2025-05-13 | Buy | 3.72 | 2.90 |
| 2025-05-09 | Buy | 4.17 | 2.71 |
| 2025-04-23 | Buy | 4.17 | 2.26 |
| 2025-02-26 | Buy | 4.81 | 3.12 |
| 2024-12-20 | Buy | 5.12 | 4.11 |
| 2024-11-11 | Buy | 5.10 | 3.69 |
| 2024-08-05 | Buy | 5.95 | 4.00 |
| 2024-06-26 | Buy | 6.16 | 4.93 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
Investment Research Disclaimers
RHB has issued this report for information purposes only. This report is intended for circulation amongst RHB and its affiliates’ clients generally or such persons as may be deemed eligible by RHB to receive this report and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. This report is not intended, and should not under any circumstances be construed as, an offer or a solicitation of an offer to buy or sell the securities referred to herein or any related financial instruments…
[The remainder of the extensive disclaimers from pages 5 and 6 would follow here, covering topics like sources of information, forward-looking statements, distribution restrictions, and analyst certifications.]
