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