Pentamaster Corp (PENT MK)
Healthy Signs Of Recovery In ATE; Stay BUY
7 August 2025
- Keep BUY, with new MYR4.25 TP from MYR3.72, 14% upside. 1H25 results were broadly in line on stronger 2H outlook. Management is optimistic of a better 2H25F and FY26F, underpinned by ongoing project deliveries, improving orderbook and emerging growth drivers. While FY25F is set to be a transition year with negative growth, it is well guided and reflected in the stock’s below mean valuation. We continue to like PENT for its exposure to the recovering automated test equipment (ATE) segment and its pivot toward next-generation technology growth trends.
- Within expectations. 1H25 core net profit of MYR30.4m (-30.4% YoY) came in at 39% and 41% of our and Street estimates. We deem this to be in line, expecting a stronger 2H driven by orderbook recovery and scheduled project deliveries. Core earnings exclude MYR1.7m in delisting expenses, MYR4.3m in accelerated Employee Share Option Scheme or ESOS charges, unrealised FX losses and fair value and disposal gain/loss. EBITDA margin declined, pressured by lower revenue, higher costs, and adverse FX movements.
- Group revenue fell 19.2% YoY to MYR276.5m, largely dragged by a sharp 51% YoY contraction in the factory automation solution (FAS) division, due to lower medical segment project deliveries stemming from timing differences and slower order conversion cycles. On a brighter note, the ATE segment saw a strong 25.2% YoY rebound in revenue to MYR178.5m, driven by electro-optical sectors and uptick in test handlers for semiconductor customers.
- A slow year for factory automation solutions (FAS). The medical segment is projected to account for c.30% of FY25 revenue as the expansion at a customer’s site is near the tail-end while the transition to new customer/segment will take a longer period due to the longer production cycle time. The group is actively pursuing new upgrade orders from existing medical clients, while also expanding into emerging verticals such as renewable energy, data centres, and healthcare automation to diversify its customer base.
- Recovery seen in ATE to sustain into 2H25F, underpinned by a recovery in semiconductor industry and improved orders from the Singapore, China, Europe and Japan markets. Management notes that semiconductor customers have gradually resumed capex in the next-generation test handling and burn-in systems, especially in the logic and power sub-segments, and foresees sustained strong orders into 2H with certain order conversion only realising in 1Q26. The group is also ramping up its development of higher-value equipment used in silicon photonics and logic testing, which are deployed in advanced packaging and artificial intelligence (AI)-related supply chains. Still, meaningful contribution from these initiatives is only expected from FY26F onwards.
- We raise our TP to MYR4.25 from MYR3.72 after rolling forward our valuation base year to FY26F, based on an unchanged 33x P/E (+0.5SD of its 5-year mean), inclusive of a 2% ESG premium. Our earnings are relatively unchanged except for the minor tweak of 1-3% post-annual report review. Downside risks: Slow replenishment of orderbook, skilled labour shortages and FX.
Target Price (Return): MYR4.25 (+14%)
Price (Market Cap): MYR3.72 (USD626m)
ESG score: 3.1 (out of 4)
Avg Daily Turnover (MYR/USD): 6.79m/1.60m
Analyst
Lee Meng Horng
+603 2302 8115
lee.meng.horng@rhbgroup.com
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (10.6) | 6.6 | 42.5 | 0.8 | (9.9) |
| Relative | (4.4) | 7.2 | 42.2 | 3.6 | (7.8) |
52-wk Price low/high (MYR): 1.90-4.61
Pentamaster Corporation (PENT MK) Price Chart
(Chart showing price close and relative performance to FBM KLCI from Aug-24 to Jul-25)
Source: Bloomberg
| 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) | 30.21 | 32.15 | 34.26 | 29.44 | 27.03 |
| P/B (x) | 3.8 | 3.5 | 3.3 | 3.0 | 2.8 |
| P/CF (x) | 12.33 | 19.36 | 34.22 | 22.11 | 19.20 |
| Dividend Yield (%) | 0.5 | na | 1.1 | 0.5 | 0.5 |
| EV/EBITDA (x) | 15.24 | 19.64 | 18.98 | 15.56 | 13.81 |
| Return on average equity (%) | 13.4 | 9.0 | 10.0 | 10.8 | 10.7 |
Source: Company data, RHB
Overall ESG Score: 3.1 (out of 4)
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
PENT’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.
| 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
PENT 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 is the consumption of electricity of machineries.
S Score: 3.0 (GOOD)
The group 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. PENT provides clear, timely and reliable information that is compliant with Malaysia’s regulatory framework. Shareholder rights are well-protected.
ESG Rating History
ESG Rating Chart showing a consistent rating of 3.0 from Aug-23 to Aug-25.
Source: RHB
Financial Exhibits
Asia
Malaysia
Equipment
Pentamaster Corp
PENT MK
Buy
Valuation basis
33x FY26F P/E
Key drivers
- Stronger orderbook;
- Recovery of the automotive sector;
- Semiconductor upcycle.
Key risks
- Slow replenishment of orderbook;
- Skilled-labour shortages;
- Unfavourable FX.
Company Profile
Pentamaster Corp provides integrated and customized 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) | 30.21 | 32.15 | 34.26 | 29.44 | 27.03 |
| P/B (x) | 3.8 | 3.5 | 3.3 | 3.0 | 2.8 |
| FCF Yield (%) | 4.2 | (0.7) | (2.7) | 2.6 | 3.3 |
| Dividend Yield (%) | 0.5 | 1.1 | 0.5 | 0.5 | |
| EV/EBITDA (x) | 15.24 | 19.64 | 18.98 | 15.56 | 13.81 |
| EV/EBIT (x) | 17.15 | 23.64 | 23.33 | 19.87 | 17.97 |
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
Results At a Glance
Figure 1: Earnings review
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 171.4 | 131.6 | 144.9 | 10.1 | (15.5) | 342.2 | 276.5 | (19.2) | Weaker FAS revenue, partially cushioned by stronger ATE |
| Gross profit | 47.4 | 35.0 | 39.0 | 11.6 | (17.6) | 96.9 | 74.0 | (23.6) | |
| GP margin (%) | 27.6 | 26.6 | 26.9 | 28.3 | 26.8 | ||||
| Adjusted EBITDA | 42.3 | 24.4 | 34.4 | 41.0 | (18.5) | 77.9 | 58.9 | (24.5) | Affected by delisting expenses, accelerated ESOS expenses and FX |
| Adjusted EBITDA margin (%) | 24.7 | 18.6 | 23.8 | 22.8 | 21.3 | ||||
| Depreciation | (5.3) | (6.8) | (7.0) | 3.4 | 33.7 | (10.3) | (13.9) | 33.9 | |
| Adjusted EBIT | 37.0 | 17.6 | 27.4 | 55.5 | (26.0) | 67.6 | 45.0 | (33.4) | |
| EBIT margin (%) | 21.6 | 13.4 | 18.9 | 19.7 | 16.3 | ||||
| Share of associate | (0.0) | (0.8) | (0.3) | (65.4) | 793.3 | (0.3) | (1.0) | 313.5 | |
| El/Others | (4.9) | 3.7 | (9.5) | (355.1) | 93.9 | (4.4) | (5.8) | 30.1 | Delisting expenses, ESOS, unrealised FX gains/ losses, forward contracts gain/losses, provisions/reversals on inventories |
| Reported PBT | 32.1 | 20.6 | 17.6 | (14.1) | (45.0) | 62.9 | 38.2 | (39.3) | |
| Tax | (0.5) | (0.3) | (0.3) | 1.8 | (28.8) | (1.0) | (0.7) | (32.0) | |
| Effective tax rate (%) | 1.5 | 1.6 | 1.9 | 1.5 | 1.7 | ||||
| Minority interest | (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) | |
| Core profit | 24.8 | 9.4 | 21.1 | 125.4 | (14.9) | 43.7 | 30.4 | (30.4) | Within expectations |
| Core net margin (%) | 14.5 | 7.1 | 14.6 | 12.8 | 11.0 |
Source: Company data, RHB
Figure 2: Segmental earnings
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | |||||||||
| Automated test equipment | 69.8 | 95.8 | 82.7 | (13.7) | 18.5 | 142.6 | 178.5 | 25.2 | |
| Factory automation solutions | 101.5 | 35.8 | 61.2 | 70.9 | (39.8) | 199.4 | 97.0 | (51.4) | |
| PBT | |||||||||
| Automated test equipment | 4.2 | 24.5 | 9.3 | (61.9) | 122.4 | 15.8 | 33.8 | 113.5 | |
| Factory automation solutions | 33.8 | 4.5 | 16.6 | 264.0 | (51.0) | 57.4 | 21.1 | (63.2) | |
| PBT Margin (%) | |||||||||
| Automated test equipment | 6.0 | 25.5 | 11.3 | 11.1 | 18.9 | 6.0 | QoQ: Loss of economies of scale and FX impact | ||
| Factory automation solutions | 33.3 | 12.7 | 27.1 | 28.8 | 21.8 | 33.3 | YoY: Impacted by lower revenue |
Source: Company data, RHB
Recommendation Chart
Recommendation & Target Price Chart
(Chart showing price close and target prices from Aug-20 to Feb-25)
Source: RHB, Bloomberg
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 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
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Analyst Certification
The analyst(s) who prepared this report, and their associates hereby, certify that: (1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for:
| Analyst | Company |
|---|---|
(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
