Pantech’s profit momentum to continue in fiscal year 2025

PETALING JAYA: Pantech Group Holdings BhdThe company’s earnings momentum is expected to continue through fiscal year 2025 (FY25), driven by rising activity in the oil and gas (O&G) sector as oil majors seek to capitalize on high global oil prices, according to Phillip Capital Research.

The company noted that with the launch of four new stainless steel production lines in February this year, Pantech is well-positioned for growing sales.

This applies in particular to the American and European markets.

“The company plans to increase its production capacity by another 20-25% by listing two of its manufacturing subsidiaries, Pantech Steel Industries and Pantech Stainless and Alloy (PSA).

“This expansion is in line with the anticipated growth in export sales volumes as the group looks to expand its presence globally,” the research firm noted in a recent report on the company.

Two manufacturing subsidiaries will be listed on the Main Market via a special purpose vehicle by the end of the year.

The brokerage maintains a “buy” recommendation for the company, setting a 12-month target price of RM1.42 per share.

These calculations are based on an unchanged nine-fold price-to-earnings multiple to estimated earnings per share for fiscal year 2026.

The company said the main risks to its “call” option include lower-than-expected demand for pipes, valves and fittings (PVF), unforeseen project delays and higher-than-expected operating costs.

Pantech reported a net profit of RM26.3 million for its fiscal first quarter ended May 31, a year-on-year decline of 2.6% compared with the same quarter last year.

This was despite revenue rising 4.5% year-on-year to RM255.7 million, with the group citing a lower contribution from its manufacturing arm as the reason for keeping profitability unchanged.

Reiterating its buy recommendation on Pantech shares while setting a higher target price of RM1.27 per share, TA Research said it is optimistic about the company’s long-term prospects.

This is because stable oil prices are encouraging upstream capital expenditure and downstream growth thanks to policy support such as the New Industry Master Plan 2030 and the Chemical Roadmap 2030.

The company is a one-stop shop for PVF and provides solutions for the transmission of gases and fluids.