KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) remains upbeat on Pentamaster Bhd's outlook for financial year 2024 (FY24) as it stands to benefit from the proliferation of power semiconductor devices driven by advancements in artificial intelligence (AI), automotive electrification, and medical manufacturing automation.
The research firm noted the group's orderbook of RM400 million indicated continued weakness in the automotive segment, with guidance suggesting it will contribute less than 30 per cent to overall FY24 revenue.
RHB Research noted the potential upside should orders come in faster than expected, which could slightly boost the group's earnings.
While the medical devices segment will continue to be a key contributor, Pentamaster anticipates a softer second half of 2025 (2H24), expecting it to account for 35–40 per cent of FY24 revenue due to major projects being spillovers from 2023 and deliveries frontloaded in the first half.
"Despite the reduced outlook, there are no delays or cancellations from its major customer as its capex plans remain on track.
"Meanwhile, the semiconductor division is projected to post improved numbers in the second half, supported by the gradual recovery of the sector, with guidance suggesting a 10-12 per cent share of total revenue.
"Additionally, the electro-optical industry is expected to maintain its momentum with a contribution of c.10-12 per cent. The remaining revenue will come from consumer and industrial products, where 2H24 is anticipated to remain weak," it said.
It added Pentamaster plans to carve out a dedicated solar segment, aiming for a low double-digit revenue contribution by 2025.
The group is seeing increased integration of automation with renewable energy, particularly in solar manufacturing, has been actively securing orders in this sector, and is committed to supporting the expansion of automation in the solar energy market.
The firm maintained a buy on the stock with a lower target price of RM5.95.
It also revised down its earnings forecast for Pentamaster to six per cent, three per cent and two per cent for FY24-FY26.