Broker: UOB Kay Hian
Date of Report: Thursday, 07 August 2025

Pentamaster Corporation: Improved Visibility and Strategic Growth Drive Upbeat Outlook for 2H25

Overview: Pentamaster Corporation Bhd – Navigating a Transformative Industry Landscape

Pentamaster Corporation Bhd (PENT MK), a global provider of automated solutions for sectors including semiconductors, pharmaceuticals, medical devices, automotive, F&B, and consumer goods, is showing resilience and adaptability amid a challenging macro environment. The latest financial review from UOB Kay Hian highlights a company in transition, leveraging improved market visibility, strategic partnerships, and technological opportunities to anchor a stronger performance in the second half of 2025.

Key Stock Data and Performance Highlights

• Share Price: RM3.72
• Target Price: RM3.75 (Raised from RM3.36)
• Upside: 0.8%
• Market Cap: RM2,646.1 million (US\$618.0 million)
• Shares Issued: 711.3 million
• 52-Week High/Low: RM5.32 / RM1.90
• Major Shareholders:
  • Chuah Choon Bin: 19.7%
  • Bank Julius Baer & Co AG: 19.7%
  • Employees Provident Fund: 11.0%
• FY25 NAV/Share: RM1.62
• FY25 Net Cash/Share: RM0.64

Financial Performance Snapshot: 1H25 Results in Focus

Pentamaster posted a sequentially stronger second quarter, with improved margins and better operational efficiency. While the orderbook remains stable at RM350 million, the outlook is brighter thanks to clearer tariff outcomes and a gradual resumption of customer capital investments, particularly in next-generation technologies such as AI, data centers, high-performance computing (HPC), and networking.

1H25 Results Breakdown

• 2Q25 core net profit: RM19.0m (up 103% qoq, down 33% yoy)
• 1H25 core net profit: RM28.4m (44% of UOBKH full-year estimate, 38% of consensus estimate)
• 1H25 revenue: RM276.5m, down 19.2% yoy
• Gross Profit Margin: 26.9% in 2Q25
• EBITDA Margin: 17.2% in 2Q25
• Net Profit Margin: 8.0% in 2Q25

Segmental Revenue Performance (1H25 vs 1H24)

Operational and Strategic Insights

Orderbook Stability and Improving Visibility

• Orderbook stands at RM350m, unchanged from the previous quarter.
• Improved clarity on tariffs, especially in ATE, has led to customers resuming capital investments in next-gen test handling and burn-in systems.
• FAS segment is diversifying into renewable energy, data centers, and healthcare automation to broaden its customer base.

Strategic Partnerships and Market Access

• Pentamaster benefits from the recent privatisation of PIL with Puga Holdings Limited – backed by prominent semiconductor players and sovereign wealth funds.
• Puga’s network provides Pentamaster with access to new customers, collaborative R&D, and strategic market-entry opportunities in key technology hubs like Taiwan and the US.

Secular Growth Anchors

• Accelerating demand in AI, HPC, and other high-speed, data-intensive applications underpins long-term growth prospects for Pentamaster.
• Continued investment in advanced packaging technologies positions the group for next-gen technology cycles.

Earnings Revision and Risk Assessment

• 2025-26 earnings forecasts raised by 7-12% on anticipated higher margins and stronger medical and renewable energy segment orders.

Valuation and Recommendation

• Recommendation: HOLD
• Target Price: RM3.75 (based on 34.0x 2026F PE, reflecting the sector’s seven-year average forward PE)
• The stock rebounded from a trough of RM1.90 in April 2025, fueled by improved sentiment from clearer tariff outcomes and stronger fundamentals.
• Current valuation considered fair, with a balanced risk-reward profile following the sharp share price recovery.

ESG Updates: Environmental, Social, and Governance Initiatives

• Environmental: Material procurement, assembly, and programming commence only after customer approval to minimize waste.
• Social: In 2020, Pentamaster contributed to NGOs, provided computers to schools and charities, supplied low-cost ventilators to hospitals, and offered financial support to the needy.
• Governance: Anti-Bribery and Anti-Corruption Policy in place, with zero whistle-blowing or bribery incidents reported in 2020.

Profit & Loss, Balance Sheet, and Cash Flow Highlights

Key Takeaways for Investors

• Pentamaster is leveraging improved industry visibility and robust strategic partnerships to position itself for next-generation technology growth.
• While near-term challenges persist, especially in margin pressures and certain end-markets like medical devices, the company’s diversified orderbook and proactive expansion strategies present medium- to long-term opportunities.
• With the stock rebounding sharply from previous lows and fundamentals strengthening, UOB Kay Hian maintains a HOLD rating with a slightly higher target price, reflecting a fair valuation and balanced risk-reward outlook.