KUALA LUMPUR: AmInvestment Research is retaining its Hold call on Pentamaster Corp with a higher fair value of RM4.77 a share.
The research house said the FV was pegged to an unchanged FY21F PE of 33 times (previously RM4.21) which was in line with its benchmark target PE for large-cap automated test equipment (ATE) players.
The 33 times PE represents a 50% premium over the three-year historical forward PE of 22 times as prospects brighten for the ATE sector riding on innovations such as 3D sensors, Industry 4.0, electric and autonomous vehicles, and 5G.
Accelerated by the Covid-19 pandemic, these innovations have also benefitted from the US-China tech decoupling.
“We lower our FY20F forecasts by 5% as we assume that the group’s revenue recognition to continue to face constraints in 4QFY20.
“However, we raise our FY21F–FY22F forecasts by 13–15% premised upon the assumption that the delayed revenue recognition would come in FY21F as Covid-19-related travel restrictions ease, and the contribution for the ATE segment particularly in the electro-optical segment would recover strongly.
“Despite project deliveries and site installations being constrained by cross-border travel restrictions, the group said that no orders have been cancelled and orders had only been pushed back, with approximately RM60mil revenue unrecognised year-to-date.
“Also, save for the electro-optical (telecommunications) segment, Pentamaster has seen growth for the rest of the customer segments while the business segment split between ATE and FAS is also more balanced, ” AmInvest Research said.
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