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Saturday, October 18th, 2025

CPE Technology (CPETECH MK) Delivers Stellar FY25 Results: Strong Semiconductor Growth, 120% Profit Surge, BUY Rating Maintained 1

Maybank Investment Bank Berhad
Date of Report: August 24, 2025

CPE Technology Delivers Robust FY25 Performance: Strong Growth, Strategic Positioning, and Future Upside

Overview: CPE Technology Surpasses Expectations in FY25

CPE Technology Berhad (CPETECH MK), a precision parts manufacturer and CNC machining services provider for the semiconductor and other high-value industries, has posted a remarkable FY25 performance. The company’s core net profit surged over 120% year-on-year (YoY) to MYR28 million, significantly exceeding forecasts. This growth was driven by robust semiconductor demand and a favorable product mix, which expanded EBIT margins and lifted profit margins. Despite some margin compression in the final quarter due to preparatory costs for new customers, the company’s long-term growth prospects remain intact.

Key Highlights and Investment Summary

  • FY25 core net profit: MYR28 million, up over 120% YoY
  • Revenue: MYR129 million, up 43% YoY
  • EBIT margin: Expanded by 8.1 percentage points to 22.8%
  • Core net profit margin: Increased by 7.8 percentage points to 21.4%
  • Target Price (TP): Maintained at MYR1.00, implying a 34% upside from current levels
  • Valuation: Based on 25x CY26E EPS (-1.5SD to sector’s 5-year forward mean)
  • Recommendation: BUY

FY25 Results Snapshot: Revenue and Margins

Metric 4QFY25 3QFY25 4QFY24 FY25 FY24 YoY Change (%)
Turnover (MYR m) 32.4 34.2 23.2 129.1 90.1 43.4
Gross Profit (MYR m) 8.7 12.1 4.6 40.0 23.2 72.7
EBIT (MYR m) 6.0 9.5 2.4 29.5 13.3 122.4
Core Net Profit (MYR m) 5.7 8.6 2.6 27.6 12.3 125.1
EBIT Margin (%) 18.5 27.7 10.3 22.8 14.7 8.1
Core Net Profit Margin (%) 17.6 25.1 11.4 21.4 13.6 7.8

Quarterly Trends: Investments Impact Margins, Future Upside Expected

  • Revenue dipped 5% QoQ in 4QFY25 as customers had front-loaded orders in the previous quarter, resulting in softer 4Q demand.
  • Core profit fell 33% QoQ to MYR6 million, affected by preparation costs for new customers and weaker order volumes.
  • These investments are expected to support future earnings, though they caused margin compression in the current quarter.
  • Core profit margin contracted by 7.4 percentage points QoQ to 17.6%.

Long-Term Growth: Strategy and Market Positioning

CPE Technology maintains a positive long-term outlook, with earnings forecasts and target price unchanged. The company is positioned for:

  • Strong 3-year earnings CAGR of 32%
  • Strategic exposure to front-end semiconductor markets
  • Niche role in IGS components for global industry leaders
  • Solid market share and proven execution

Share Performance and Ownership Structure

  • Current Share Price: MYR0.75
  • 12-month Price Target: MYR1.00 (+34%)
  • Market Capitalisation: MYR503.5 million (USD119 million)
  • Major Shareholders:
    • LEE CHEN YEONG: 28.1%
    • FOO MING: 16.8%
    • MU WOON CHAI: 11.2%
  • Free Float: 32.4%
  • 52-week high/low: MYR1.14 / MYR0.46
  • Issued shares: 671 million

Financials: Five-Year Performance and Forecasts

Metric FY23A FY24A FY25E FY26E FY27E
Revenue (MYR m) 145 90 120 132 140
EBITDA (MYR m) 49 22 33 38 41
Core Net Profit (MYR m) 30 12 22 26 28
Core EPS (sen) 4.5 1.8 3.3 3.9 4.1
Core EPS Growth (%) (8.8) (59.3) 83.7 15.9 7.2
Net DPS (sen) 0.0 1.2 0.8 1.0 1.0
Core P/E (x) na 69.3 22.4 19.4 18.1
P/BV (x) na 2.7 1.5 1.4 1.4
Net Dividend Yield (%) na 0.9 1.1 1.3 1.4
ROAE (%) 25.1 4.9 7.0 7.6 7.7
ROAA (%) 16.8 4.5 6.3 6.9 7.0
EV/EBITDA (x) 9.9 29.3 8.6 7.1 6.1
Net Gearing (%) net cash net cash net cash net cash net cash

Balance Sheet and Cash Flow Highlights

  • Cash & Short-Term Investments (FY25E): MYR228.2 million
  • Property, Plant & Equipment (FY25E): MYR66.2 million
  • Total Assets (FY25E): MYR364.8 million
  • Total Liabilities (FY25E): MYR34.0 million
  • Shareholders’ Equity (FY25E): MYR330.7 million
  • Free Cash Flow (FY25E): MYR17.6 million
  • Dividend Paid (FY25E): MYR5.6 million

Key Ratios and Efficiency Metrics

  • EBITDA Margin: 27.7% (FY25E)
  • Pretax Profit Margin: 24.5% (FY25E)
  • Net Profit Margin: 18.6% (FY25E)
  • Current Ratio: 12.3x (FY25E)
  • Days Receivable Outstanding: 61.0 days (FY25E)
  • Days Inventory Outstanding: 198.0 days (FY25E)
  • Days Payables Outstanding: 54.5 days (FY25E)
  • Capex/Revenue: 14.3% (FY25E)
  • Net Gearing: Remains net cash

Risk Assessment: Volatility and Strategic Considerations

CPE Technology faces several risks that could impact its growth trajectory:

  • Demand volatility: Semiconductor cyclicality and trade policy shifts may affect order inflows and margins.
  • Short order visibility: As low as two months, adding unpredictability to revenue streams.
  • Production delays: Could defer earnings growth if ramping up for new customers takes longer.
  • Cost overruns: Investments for new customer onboarding may temporarily suppress margins.
  • Key personnel risk: Departure of critical leaders, such as COO Akira Nakashima, could impact client relationships.
  • Labour risks: Reliance on foreign workers and potential policy changes may raise costs.

Historical Recommendations and Price Targets

  • Investment Rating System:
    • BUY: Expected return above 10% in 12 months (including dividends)
    • HOLD: Expected return between 0%-10% in 12 months
    • SELL: Expected return below 0% in 12 months
  • Recent Recommendation: BUY, Target Price RM1.00

Conclusion: Why CPE Technology Remains a Top Pick

CPE Technology’s stellar FY25 performance highlights its strong market positioning and strategic growth plans. Despite short-term margin compression from investments, the company’s fundamentals remain robust, driven by favorable semiconductor market trends and an expanding role in high-value component manufacturing. Investors looking for exposure to the semiconductor supply chain, combined with strong financials and growth potential, should keep CPE Technology on their radar.

Research Broker Contact Information

  • Malaysia: Maybank Investment Bank Berhad, Kuala Lumpur
  • Singapore: Maybank Securities Pte Ltd, Maybank Research Pte Ltd
  • London: Maybank Securities (London) Ltd
  • Hong Kong: MIB Securities (Hong Kong) Limited
  • Indonesia: PT Maybank Sekuritas Indonesia
  • India: MIB Securities India Pte Ltd
  • Philippines: Maybank Securities Inc
  • Thailand: Maybank Securities (Thailand) PCL
  • Vietnam: Maybank Securities Limited

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