Analysts anticipate some recovery in FY22 for Pantech

KUALA LUMPUR: Pantech Group Holdings Bhd’s (Pantech) performance could improve in the financial year 2022 (FY22) on the back of resumption of economic activities, analysts observed, after the group reported a weak third quarter of FY21 (3QFY21) results.

“With FY21 being a trough year, dragged by the deteriorated sales demand as a result of the Covid19 pandemic coupled with the low oil price environment, we believe its sales demand outlook is likely to improve going into FY22 on the back of resumption of economic activities.

“Furthermore, we gathered that the re-imposition of MCO in 2021 should not result in operational disruption, unlike what was witnessed in 1QFY21,” the research team at Kenanga Investment Bank Bhd (Kenanga Research) said in a report.

On Pantech’s recently announced financial results, it said its first nine months of FY21 (9MFY21) net profit of RM13.9 million was within expectations.

Sequentially, 3QFY21 saw earnings plunging 18 per cent quarter-on-quarter (q-o-q) to RM8.7 million, dragged by softer sales demand from export markets of carbon steel, resulting in poorer manufacturing revenue, and poorer trading product mix.

On a yearly basis, Kenanga Research noted that Pantech’s net profit dropped by 15 per cent, similarly due to poorer sales.

“Cumulatively, net profit declined 51 per cent y-o-y. On top of weaker sales, the group was also affected by operations suspension due to the implementation of the MCO in 1QFY21,” it added.

All in, based on the group’s expected recovery trajectory, Kenanga Research upgraded its call on the stock to ‘market perform’.