PETALING JAYA: Steel pipe manufacturer Pantech Global Bhd, en route to a listing on the Main Market of Bursa Malaysia, offers investors a pure-play exposure to the company’s parent Pantech Group Holdings Bhd
’s manufacturing arm.
Pantech Group will remain the controlling shareholder through a 69.15% stake following the initial public offering (IPO).
Mercury Securities Sdn Bhd recommends investors to subscribe to the IPO, noting that its leading market position, steady margins, overseas exposure and capacity expansion justifies a fair value of 88 sen for the share price based on 11.5 times financial year ending Feb 28, 2026 (FY26) earnings per share.
This translates to a 29% upside potential to the IPO price of 68 sen.
The brokerage said the listing not only offers a pure-play exposure to the parent company’s manufacturing arm but also carries a higher margin than the trading arm, with its segmental profit before taxation margins climbing from 14.6% in FY22 to 18.9% in FY23, before stabilising at 16.2% in FY24.
Pantech Global has also demonstrated a robust two-year compounded annual growth rate (CAGR) for revenue of 11.9%, or a CAGR of RM441mil in FY24 from RM352mil in FY22, with a forecast of RM561mil by FY27.
“This growth is fuelled by its global footprint, with exports accounting for over 72% of sales,” the brokerage said.
The United States market remains the company’s most important, contributing 47% of total revenue in FY24, followed by the Netherlands and Canada.
Drilling down further, the company’s top five major customers, in which it has maintained a long-term relationship of more than 20 years, contributes approximately 70% of total revenue.
“A significant advantage lies in Pantech Global’s US dollar-denominated revenue, which positions it favourably against currency fluctuations, particularly amid a strong US dollar environment,” it said.
It added that the company’s products such as butt-weld pipe fittings and stainless-steel welded pipes were essential across the oil and gas, petrochemicals, water treatment, power generation, shipbuilding, semiconductors and speciality chemicals industries, which also ensures consistent demand and ensures non-reliance on any single industry.
It pointed out that the company “is well-positioned to capitalise” on the shift towards environmentally sustainable practices, where there has been an increase in investments for facility upgrades, new plant developments, and industrial expansions, particularly for specialty chemicals.
Pantech Global’s manufacturing utilisation rates of between 80% and 92% in the first-half of FY25 reflects the growing need for high-performance piping solutions across key industries.
It has plans to expand operations through the IPO proceeds and this would see overall production capacity rising to 53,410 tonnes from 50,410 tonnes.
“We expect Pantech Global to maintain a steady gross profit margin of 23% to 25% from FY25 to FY27.
“This will be supported by its improved cost efficiencies, flexible pricing strategy and strong demand for high-performance piping solutions.
“Historically, its gross profit margin ranged between 23% and 31% from FY22 to FY24, with the fluctuations mainly affected by global steel price movements,” the brokerage said.
