Pantech likely to register stronger 4Q earnings

PETALING JAYA: Pantech Group Holdings Bhd’s upcoming fourth quarter ended Feb 29, 2024 (4Q24) results, scheduled to be released on April 25, is expected to be stronger quarter-on-quarter driven by increased export sales volume and average selling prices, according to Phillip Capital Research.

“We estimate 4Q24 core net profit to range between Rm23mil and Rm28mil compared with Rm30mil in 4Q23, and Rm20mil in 3Q24.

“The improvement in sales volume can be attributed to the expectation of higher sales orders from the United States and existing customers.

“Between January and mid-march, nickel prices rose 12% following the introduction of new US sanctions against Russia,” it pointed out.

“We expect stronger customer restocking activities in the near-term amid concerns of potential further price hikes.

“Pantech is currently running at around 80% utilisation rate, allowing room to cater for more orders,” it said.

Pantech supplies and markets steel products.

The company produces pipes, fittings, flanges, induction bends, valves, and exotic materials for gas and fluid transmission systems.

The group also serves offshore, marine, refinery, energy, and petrochemical sectors globally.

Pantech’s four new stainless steel production machines, which had increased its manufacturing capacity by an additional 15%, had commenced operation since the end of February this year.

This would allow the group to increase its export sales volume, which is expected to contribute to earnings from the first quarter of 2025 onwards, the research house said.

While reiterating its “buy” call on the stock, the research house said it is cutting its financial year 2024 (FY24) earnings forecast by 9% to account for the slower-than-expected startup of its new machines.

Nevertheless, it remained positive on the FY25 earnings outlook (up 26% year-onyear), driven by higher sales orders from existing and potential new customers and increased capacity.