TA Research expects the company's profit to improve quarter-on-quarter to between RM24mil and RM28mil.
PETALING JAYA: Increased demand from local oil and gas (O&G) projects and exports should follow solid profit for Pantech Group Holdings Bhd
’s fourth quarter results ended Feb 28, 2024 (4Q24), according to TA Research.
With Pantech releasing its 4Q24 results this month, the research house expects its profit to improve quarter-on-quarter to between RM24mil and RM28mil (3Q24: RM20.4mil).
This represents 25% to 29% of its full-year forecast, TA Research added.
“Pantech is expected to continue declaring a dividend of 1.5 sen per share for 4Q24, bringing FY24 dividend per share to six sen (FY23: six sen), translating into an attractive dividend yield of 6%,” it said.
Concurrently, TA Research is sanguine on the group’s outlook due to resilient oil prices, which would encourage upstream capital expenditure.
The O&G sector continues to be Pantech’s primary revenue source, consistently contributing more than half of its revenue, it added.
According to the research firm, Pantech’s demand in the O&G sector is expected to increase with anticipation of robust oil prices, fuelled by ongoing production cuts by the Organisation of the Petroleum Exporting Countries and its allies.
Increased demand from simultaneous expansion of manufacturing activity in China and the United States in March 2024 and heightened geopolitical tensions in the Middle East are expected to spur greater upstream capital expenditure, boosting Pantech’s demand.
It noted that national oil company Petroliam Nasional Bhd had guided a capital expenditure of RM300bil for 2023-2027, or an average of RM60bil per annum, compared with RM45bil to RM47.8bil registered between 2017 and 2019 pre-pandemic.
TA Research said downstream growth for Pantech is in the pipeline as government policies and plans take place.
“Malaysia is supporting the growth of the chemical industry under the New Industrial Master Plan 2030 (NIMP2030) and the Chemical Industry Roadmap 2030 (CIR2030),” it added.
CIR2030 is expected to increase the chemical sector’s gross value add to the overall economy to more than 4.5% by 2030 from 3.4%, while the NIMP2030 intends to move Malaysia up the value chain from basic chemicals to specialty chemicals.
