PETALING JAYA: Pentamaster Corp Bhd
is expected to see stronger revenue growth in the coming financial years, supported by a RM520mil order book and rising demand from the artificial intelligence (AI) computing, medical and electro-optical segments.
That said, Phillip Research maintained its “hold” call on Pentamaster with a lower target price of RM5.19, from RM5.55, based on an unchanged 39 times price-to-earnings multiple on 2027 estimated earnings per share.
The research house remains cautious in the near to medium term, given the uncertainty surrounding the renewal of tax incentives for the factory automation solutions (FAS) segment and continued losses in the healthcare segment.
“Despite the strong revenue growth, earnings before interest, taxes, depreciation and amortisation margin narrowed by 1.2 percentage points due to higher costs from the loss-making healthcare segment.
“Stripping out RM15mil unrealised foreign-exchange gain and RM3mil forward- exchange contract loss, nine-month 2026 (9M26) core net profit of RM45mil was below our and consensus’ expectations, at 59% and 60% of the respective full-year forecasts.
“The deviation was primarily due to a higher-than-expected tax rate (9M26: 22.1%) against our full-year assumption of 16% following the expiry of pioneer tax incentives,” the research house said in a report recently.
Pentamaster’s 9M26 revenue rose 38% year-on-year (y-o-y) to RM585mil, driven by a stronger contribution from the FAS segment (up 57% y-o-y), on the back of robust demand from the AI compute segment.
Phillip Research said this was partially offset by softer contributions from the electro-optical, medical, consumer and industrial segments.
RHB Research concurred, saying the group’s 9M26 core profit after tax and minority interest (Patami) of RM49.2mil missed expectations due to a higher-than-expected effective tax rate, despite stronger revenue growth.
“Core Patami only met 62% and 66% of our and consensus full-year forecasts, respectively, due to the higher-than-expected effective tax rate (19.5%, compared with a tax credit in 9M25) following the expiry of its tax incentive,” the research house said.
RHB Research also noted that the group has a healthy order book of RM520mil, comprising medical (45%), AI computing (30%), and consumer and industrial (10%), with the remaining 15% spread evenly across other segments.
“The group is expanding its Campus 3 facilities by activating an additional 120,000 sq ft of unutilised space for future manufacturing activities. Management expects FAS to continue benefitting from a stronger project pipeline.
“Within automated test equipment (ATE), demand for sophisticated AI and high-performance computing testing should propel Pentamaster’s advanced packaging test solutions under the 9 Samurai initiative into financial year 2027 (FY27).
“Besides, it has secured a new tax incentive (70% of statutory income) for advanced packaging and advanced photonics equipment under the ATE segment,” the research house said.
RHB Research trimmed its FY26 earnings estimate by 9%, factoring in a higher effective tax rate assumption, but kept its FY27 and FY28 forecasts unchanged.
The research house maintained its “buy” call with a target price of RM6.32, based on an unchanged 36 times FY27 price-to-earnings ratio.
