PETALING JAYA: Wentel Engineering Holdings Bhd
’s new production facility, which will double its production floor space, is set to unlock the “next phase of growth”.
Pointing out that Wentel is trading at undemanding valuations, Apex Securities Research said the new plant will commence operations in the first half of 2026.
“In our view, the additional capacity offers ample runway for revenue growth, supported by Wentel’s enhanced capacity to meet increasing orders from security screening system customers, as well as broaden its exposure and customer base in the electrical and electronics (E&E) segment.”
Wentel is involved in the fabrication of semifinished metal products, fabrication of metal parts and assembly of finished products, mainly serving security screening equipment, semiconductor manufacturing equipment and computer numerical control machines manufacturers.
The new plant, named Lot 815, features a total built-up area of about 300,000 sq ft.
Post-completion of Lot 815 by end-2025, Wentel will relocate its operations from Lot 58 to Lot 815.
This will result in a net addition of 170,000 sq ft of operational floor space from 164,000 sq ft to 334,000 sq ft.
This will effectively double the group’s total production floor space.
Apex Securities Research, which has initiated its coverage on Wentel with a “buy” call, forecasts the company’s net profit to grow by a three-year compounded annual growth rate (CAGR) of 19%.
In financial year 2025 (FY25), the net profit is forecast to grow by 19.7%, followed by 18.3% in FY26 and 18.5% in FY27.
The bottom-line growth, according to the research house, will be driven by a “stellar” revenue expansion of 36% CAGR from the E&E segment supported by successful qualification of an extensive new product introductions (NPI) pipeline, steady three-year CAGR of 13% in the security screening segment and additional capacity from Lot 815.
Wentel’s E&E segment serves as a key growth driver for the group.
The E&E division currently contributes about 20% of total revenue, of which about 12% is derived from the fabrication of precision parts for front-end wafer fab equipment manufacturers.
“We expect the E&E contribution to record solid double-digit growth over the coming years, mainly driven by materialisation of ongoing NPI qualifications.
“Wentel currently has over 1,000 NPIs under assessment by its key customers,” said Apex Securities Research.
As for Wentel’s security screening business, Apex Securities Research expects the segment to be supported by an improving order visibility from its two major customers.
“We project the group’s security screening segment to grow by 18% in FY25, 12% in FY26 and 10% in FY27.
“We view the segment’s non-cyclical nature as positive, offering earnings stability amid broader market volatility.”
The research house further noted that the global security screening market is set for steady growth.
This will be fuelled by rising air passenger volumes, expanding global trade as well as intensifying trade tensions and national security concerns, which have driven stricter inspection protocols globally.
Additionally, consistent technology upgrades and replacement cycles aimed at improving detection precision serve as another key tailwind for Wentel.
Apex Securities Research has set a target price of 50 sen for the Wentel stock. It closed at 31.5 sen on Nov 7.
The research house also pointed out that Wentel was trading at an undemanding valuation of 13 times of its forecast FY26 earnings. This represents a discount to its precision engineering peers valued at an average of about 23 times.
“We believe this discount reflects its relatively lower current revenue exposure to high-growth sectors such as chips against its peers, and their established track records and deeper value-added engagements with front-end wafer fab manufacturers.”
