PETALING JAYA: Phillip Capital Research expects Pantech Group Holdings Bhd
to post a softer performance for the financial year 2026 (FY26), on the back of weaker sales demand from its trading division.
Despite the anticipated earnings decline in FY26, the brokerage firm in a note to clients said the group’s dividend yield of over 8% remains intact.
The pipe-and-valve manufacturer’s latest FY25 core net profit of RM102mil, up 4% year-on-year, missed expectations, accounting for 94% and 89% of Phillip Capital Research and consensus estimates.
The brokerage firm has maintained a “buy” call on the stock with an unchanged target price (TP) of 89 sen.
“We had previously lowered our FY26 to FY27 earnings forecast after factoring in the anticipated softness in the trading division and increased minority interest,” it noted.
Having said that, Pantech’s attractive dividend yield of over 8% should support the current share price.
“While earnings are expected to decline in FY26, we expect a six sen dividend payout to be sustainable,” added Phillip Capital Research.
The key risks to its “buy” call include lower-than-expected demand for pipes, valves and fittings, unforeseen project delays, and higher-than-expected operating costs.
Meanwhile, TA Research in a report said the increase in reciprocal tariffs by the United States has raised concerns on the group’s outlook.
“However, steel products are already subject to Section 232 tariffs under the Trade Expansion Act of 1962, which are typically absorbed by US importers.
“Based on our channel checks, we expect these tariff costs to continue being passed on to customers,” said the research house.
Nevertheless, TA Research remains cautious, as there may be significant indirect effects, such as demand-side risks related to the final products, such as increased prices for end consumers, reduced demand for higher-priced goods, or shifts in consumer purchasing behaviour towards lower-cost alternatives.
The research house also expects Pantech’s future prospects to be strengthened through its subsidiary, Pantech Global Bhd.
The company is investing in significant upgrades to its Klang factory, focusing on automation and advanced machinery to improve production efficiency and reduce reliance on manual labour.
“Key enhancements, such as the replacement of induction components in forming machines, the introduction of a digitalised high frequency induction long bends machine, and expanded computer numerical control machining capacity, are expected to bolster Pantech Global’s production capabilities and support long-term business growth,” explained TA Research.
The research house has kept a “buy”call on Pantech, but with a lower TP of 96 sen in line with its revised earnings forecasts.
The valuation adjustment reflects lingering uncertainty stemming from the United States’ potential tariff policy.
However, Pantech still remains an attractive dividend play, with yields of over 5% for FY26 to FY28, said TA Research.
At the time of writing, Pantech shares traded at 72 sen.
