Pentamaster (PENT MK)
- 2Q25 core net profit was in line with ours and consensus estimate
- Management is upbeat on 2H25, expecting a rebound in ATE demand as semiconductor customers resume capex
- We downgrade the stock to HOLD albeit with a higher TP of RM3.57
2Q25 core earnings declined 14% YoY
2Q25 revenue declined 16% YoY to RM145m, mainly due to lower contributions from the Factory Automation Solutions (FAS) segment. The medical segment saw a sharp 54% YoY drop, while the automotive segment declined 14% YoY, both impacted by demand normalization following a strong expansion in the prior year. After stripping out the RM7m forex loss, RM5m employees’ share scheme and RM1m PIL delisting costs, core net profit stood at RM20m (+44% QoQ, -14% YoY), accounting for 45% of our and 46% street’s full-year forecasts. The result is in line with our expectations, in anticipation of stronger 2H25 earnings.
6M25 core net profit within expectations
6M25 core net profit declined 29% YoY to RM34m, due to the weaker medical segment, but was partially offset by stronger contributions from consumer/industrial and semiconductor segments. The group’s renewable energy segment also began contribution during the quarter. Pentamaster’s order book remained stable QoQ at RM350m, with FAS accounted for 65% of the total (50% medical, 13% consumer/industrial, 2% electro-optical, 1% renewable energy). The remaining 35% was from the ATE segment, led by automotive (19%) and semiconductor (15%).
Downgrade to HOLD with a higher TP of RM3.57
We raise our 12-month target price to RM3.57, pegged to a target PE of 28x on 2026E EPS (based on its updated -1.5SD its 3-year mean; from 25x or -1.5D its 5-year mean previously). Management anticipates stronger earnings momentum in 2H25, supported by better ATE demand outlook, citing a recovery in semiconductor capex as customers resume capex in the next-generation test handling and burn-in systems. We downgrade the stock to HOLD as the recent 34% share price rally has priced in near-term upside with a more balanced risk-reward profile. Key risks to our call include sharp appreciation of RM versus US$, better/lower-than-expected margins, and customer orders.
Key Financials
| Y/E Dec | 2023 | 2024 | 2025E | 2026E | 2027E |
|---|---|---|---|---|---|
| Revenue (RMm) | 691.9 | 623.0 | 672.9 | 699.8 | 727.8 |
| EBITDA (RMm) | 139.8 | 129.2 | 122.9 | 145.7 | 152.5 |
| Pretax profit (RMm) | 128.5 | 105.4 | 109.2 | 129.5 | 142.5 |
| Net profit (RMm) | 76.2 | 65.2 | 76.0 | 90.7 | 102.0 |
| EPS (sen) | 10.7 | 9.2 | 10.7 | 12.7 | 14.3 |
| PER (x) | 34.7 | 40.6 | 34.8 | 29.2 | 25.9 |
| Core net profit (RMm) | 86.8 | 79.7 | 76.0 | 90.7 | 102.0 |
| Core EPS (sen) | 12.2 | 11.2 | 10.7 | 12.7 | 14.3 |
| Core EPS growth (%) | 18.0 | (8.2) | (4.7) | 19.3 | 12.5 |
| Core PER (x) | 30.5 | 33.2 | 34.8 | 29.2 | 25.9 |
| Net DPS (sen) | 2.0 | 2.0 | 2.0 | 3.0 | 3.0 |
| Dividend Yield (%) | 0.5 | 0.5 | 0.5 | 0.8 | 0.8 |
| EV/EBITDA (x) | 17.6 | 19.6 | 20.8 | 17.5 | 16.5 |
| Chg in EPS (%) | |||||
| Phillip/Consensus (%) | 1.03 | 1.02 | 0.99 |
Results at a glance
| Y/E Dec (RMm) | 2Q24 | 1Q25 | 2Q25 | QoQ % chg | YoY % chg | 6M24 | 6M25 | YoY % chg | YoY Comment |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 171.4 | 131.6 | 144.9 | 10.1 | (15.5) | 342.2 | 276.5 | (19.2) | Driven by higher contribution from FAS segment, particularly medical segment |
| Op costs | (133.2) | (104.3) | (113.2) | 8.5 | (15.1) | (266.3) | (217.5) | (18.3) | |
| EBITDA | 38.1 | 27.3 | 31.7 | 16.1 | (16.9) | 75.9 | 59.0 | (22.2) | |
| EBITDA margin (%) | 22.3 | 20.8 | 21.9 | 1.1ppt | (0.4ppt) | 44.3 | 42.6 | (1.7ppt) | |
| Depreciation | (5.3) | (6.8) | (7.0) | 3.4 | 33.7 | (10.3) | (13.9) | 33.9 | |
| EBIT | 32.9 | 20.5 | 24.7 | 20.3 | (25.0) | 65.5 | 45.2 | (31.1) | |
| EBIT margin (%) | 19.2 | 15.6 | 17.0 | 1.4ppt | (2.2ppt) | 38.3 | 32.6 | (5.7ppt) | |
| Interest Income | 2.6 | 1.6 | 1.6 | (0.1) | (36.5) | 6.0 | 3.3 | (44.9) | |
| Associates | (0.0) | (0.8) | (0.3) | (65.4) | 793.3 | (0.3) | (1.0) | 313.5 | |
| Exceptional items | (3.4) | (0.8) | (8.4) | n.m | n.m | (8.4) | (9.2) | n.m | Mainly consist of RM7m forex loss, RM5m PIL employees share scheme, RM1m delisting expenses for PIL |
| Pretax profit | 32.1 | 20.6 | 17.6 | (14.1) | (45.0) | 62.9 | 38.2 | (39.3) | |
| Core pretax profit | 35.4 | 21.4 | 26.0 | 21.8 | (26.5) | 71.2 | 47.4 | (33.4) | |
| Taxation | (0.5) | (0.3) | (0.3) | 1.8 | (28.8) | (1.0) | (0.7) | (32.0) | |
| Tax rate (%) | 1.3 | 1.5 | 1.3 | (0.3ppt) | (0.0ppt) | 2.7 | 2.8 | 0.1ppt | |
| MI | (11.7) | (7.2) | (5.7) | (20.3) | (51.3) | (22.6) | (12.9) | (43.2) | |
| Net profit | 19.9 | 13.1 | 11.6 | (11.1) | (41.7) | 39.3 | 24.7 | (37.2) | |
| EPS (sen) | 2.8 | 1.8 | 1.6 | (11.1) | (41.7) | 5.5 | 3.5 | (37.2) | |
| Core net profit | 23.2 | 13.9 | 20.0 | 44.0 | (14.0) | 47.6 | 33.9 | (28.9) | In line with ours and consensus expectation |
Segmental Revenue & PBT Breakdowns
Segmental Revenue Breakdown (Y/E Dec, RMm)
| 2Q24 | 1Q25 | 2Q25 | QoQ % chg | YoY % chg | 6M24 | 6M25 | YoY % chg | |
|---|---|---|---|---|---|---|---|---|
| ATE | 69.8 | 95.8 | 82.7 | (13.7) | 18.5 | 142.6 | 178.5 | 25.2 |
| FAS | 101.5 | 35.8 | 61.2 | 70.9 | (39.8) | 199.4 | 97.0 | (51.4) |
| Smart Solution | 0.0 | 0.0 | (0.0) | n.m | n.m | 0.1 | (0.0) | n.m |
| Adjustments | 0.0 | 0.0 | 1.0 | n.m | n.m | 0.0 | 1.0 | n.m |
| Total | 171.4 | 131.6 | 144.9 | 10.1 | (15.5) | 342.2 | 276.5 | (19.2) |
Segmental PBT Breakdown (Y/E Dec, RMm)
| 2Q24 | 1Q25 | 2Q25 | QoQ % chg | YoY % chg | 6M24 | 6M25 | YoY % chg | |
|---|---|---|---|---|---|---|---|---|
| ATE | 4.2 | 24.5 | 9.3 | (61.9) | 122.4 | 15.8 | 33.8 | 113.5 |
| FAS | 33.8 | 4.5 | 16.6 | 264.0 | (51.0) | 57.4 | 21.1 | (63.2) |
| Smart Solution | (1.0) | 0.1 | (0.1) | n.m | n.m | (1.5) | (0.0) | n.m |
| Adjustments | (4.9) | (8.5) | 8.5 | n.m | n.m | (8.8) | 0.0 | (100.0) |
| Total | 32.1 | 20.6 | 34.3 | 66.9 | 6.9 | 62.9 | 54.8 | (12.8) |
Segmental PBT Margin (Y/E Dec)
| 2Q24 | 1Q25 | 2Q25 | QoQ ppt | YoY ppt | 6M24 | 6M25 | YoY % chg | |
|---|---|---|---|---|---|---|---|---|
| ATE | 6.0 | 25.5 | 11.3 | (14.3ppt) | 5.3ppt | 22.0 | 36.8 | 67.5 |
| FAS | 33.3 | 12.7 | 27.1 | 14.3ppt | (6.2ppt) | 57.4 | 39.8 | -30.7 |
| Total | 18.7 | 15.6 | 23.7 | 8.1ppt | 4.9ppt | 36.8 | 39.3 | 6.9 |
Segmental Revenue Breakdown by Sub-segment (Y/E Dec, RMm)
| 2Q24 | 1Q25 | 2Q25 | QoQ % chg | YoY % chg | 6M24 | 6M25 | YoY % chg | |
|---|---|---|---|---|---|---|---|---|
| Automotive | 51.4 | 51.0 | 44.1 | (13.6) | (14.3) | 95.3 | 95.1 | (0.2) |
| Medical | 77.0 | 6.9 | 35.6 | 416.7 | (53.8) | 155.5 | 42.5 | (72.7) |
| Semiconductor | 11.5 | 26.4 | 11.9 | (54.7) | 3.9 | 21.3 | 38.3 | 79.9 |
| Consumer/industrial | 6.8 | 20.3 | 16.9 | (16.6) | 149.6 | 16.9 | 37.3 | 120.3 |
| Electro-optical | 24.7 | 26.8 | 32.8 | 22.3 | 32.9 | 53.0 | 59.6 | 12.3 |
| Renewable Energy | 0.0 | 0.0 | 3.6 | n.m | n.m | 0.0 | 3.6 | n.m |
| Others | 0.0 | 0.2 | (0.0) | n.m | n.m | 0.1 | 0.2 | 67.9 |
| Total | 171.4 | 131.6 | 144.9 | 10.1 | (15.5) | 342.2 | 276.5 | (19.2) |
