TA Research trimmed FY26 to FY28 earnings by 20.9% to 23.3%.
PETALING JAYA: Pantech Group Holdings Bhd
’s near-term outlook remains subdued as weaker activity in Malaysia’s oil and gas sector continues to weigh on sales and margins.
TA Research and Phillip Capital Research cut their earnings forecasts for the financial year 2026 (FY26) to FY28, reflecting slower domestic project rollouts, lower trading volumes, and rising operating costs.
However, both research houses maintained their “buy” calls, citing the group’s strong balance sheet, resilient cash flows, and attractive dividend yield.
TA Research noted that Pantech’s first half of FY26 core net profit of RM47.4mil came in below expectations, reaching only 39% of its full-year forecast.
It said the shortfall was largely due to softer demand from the domestic oil and gas segment and higher costs that trimmed operating margins by 1.6 percentage points year-on-year (y-o-y).
Profit before tax in second quarter of FY26 (2Q26) fell 22.4% y-o-y and 8.1% quarter-on-quarter, dragged by weaker performances in the trading and manufacturing divisions.
The trading arm saw a 16.6% y-o-y earnings before interest and tax (Ebit) decline amid slower deliveries, while the manufacturing division’s Ebit dropped 24.5% y-o-y due to softer stainless-steel prices and unfavourable foreign exchange movements.
TA Research trimmed FY26 to FY28 earnings by 20.9% to 23.3%, cutting its target price to 72 sen from 96 sen but maintained a “buy” call.
It expects earnings momentum to stay muted in the near term, in line with Petroliam Nasional Bhd’s cautious spending outlook and softer Brent crude prices.
However, Pantech’s diversification across petrochemical, palm oil, water treatment, and shipbuilding sectors should help cushion the blow from weaker oil and gas demand.
The manufacturing division’s stable customer base and ability to pass on part of its cost increases offer further support.
TA Research highlighted the group’s strong cash position and minimal gearing, viewing it as a solid dividend play with an estimated yield of around 10%.
Phillip Capital Research similarly revised its earnings forecasts lower, cutting FY25 to FY27 earnings per share by 6% to 33%.
It expects FY26 earnings to fall about 30% due to deferred oil and gas project rollouts.
Its target price was reduced to 85 sen from 89 sen based on eight times FY27 earnings, but the research house retained its “buy” rating, viewing the stock’s six times FY27 price-to-earnings ratio as an attractive entry point given that much of the near-term weakness has already been priced in.
Overall, analysts see limited earnings catalysts in the short term, but Pantech’s strong fundamentals, steady cash generation, and high dividend yield continue to make it appealing for income-focused investors.
