PETALING JAYA: Automation manufacturer Pentamaster Corp Bhd
is well-positioned to benefit from the automated test equipment (ATE) upcycle, given the company’s strengths in automation solutions, says Kenanga Research.
The research house, which recently initiated coverage on the stock with an “outperform” call and target price of RM4.25, said the company’s other strengths include added capacity (through newly built Campus 3), full-stack customisation ensuring customer retention, and a recently inked joint venture adding options to the artificial intelligence (AI) and high-performance computing theme.
Semi, the microelectronics industry association, projects the global ATE market to grow by a six-year compounded average growth rate of 4.8% to US$10.2bil by 2030, driven by rising device complexity, tighter quality thresholds and deeper test automation.
Kenanga Research said structural demand for automation, high-power semiconductor testing and smart manufacturing remains resilient despite macro headwinds, aligning well with the company’s core strengths.
“Ongoing adoption of AI-enabling hardware/software and automotive electrification continues to drive orders, while recent investments in advanced packaging solutions and the completion of Campus 3 further expand its execution capacity,” it added.
The research house expects sequential improvement to the company’s performance, underpinned by factory automated solutions (FAS), after financial performance over the nine months to Sept 30 was weighed down by macro and trade-tension headwinds.
The order book strengthened to RM450mil in the third quarter ended Sept 30, 2025 (3Q25) from RM400mil in 2Q25.
This came on steady, project-based inflows from both existing and new customers.
“Even so, the financial year ending Dec 31, 2025 (FY25) remains a transition year before momentum re-accelerates in FY26.
“We forecast FY25 revenue of RM585mil (down 6.2% year-on-year or y-o-y) and profit after tax and minority interest (Patami) of RM62mil (down 4.9% y-o-y), reflecting a still-cautious environment and mix normalisation.
“Looking into FY26, we expect growth to re-accelerate on the execution of new projects and sustained demand across logic and power semi end-markets.
“We project revenue to grow 19% y-o-y to RM698mil, led by FAS at RM365mil (31% y-o-y rise; about 52% mix) as medical customers step up automation alongside advances in med-tech.
“ATE should remain solid on steady automotive and electro-optical demand, delivering RM333mil (13% y-o-y; about 48% mix).
“We see gross margin improving to 27.7% (from 26.7%) on a better mix and higher medical contribution, driving Patami higher 39% y-o-y to RM86mil,” it added.
