Pentamaster in line with expectations
KUCHING: Pentamaster Corporation Bhd’s (Pentamaster) results came in line with analysts’ expectations amidst a gradual easing of Covid- 19 containment measures which may alleviate production constraints.
This comes as Pentamaster’s first quarter of financial year 2020 (1QFY20) results came in line with expectations at RM16 million.
This is after excluding net oneoff gains amounting RM1 million, as unrealised forex losses were offset by gains in fair value of forex forward contracts.
Year on year (y-o-y), AmInvestment Bank Bhd (AmInvestment Bank) saw that its 1QFY20 core profit fell 23 per cent in tandem with revenue dropping by 16 per cent as Pentamaster recorded lower automated test equipment (ATE) sales amid Covid-19 disruptions.
This was offset by higher demand for factory automated solutions (FAS). 1QFY20 GP margin remained steady at 34 per cent, declining by 0.6 percentage point (ppt) despite Covid-19 constraints.
“On a quarterly basis, core profit rose 34 per cent after taking out larger net one-off gain of RM11 million contracts in 4QFY19, mainly from gains on fair value changes in forex forward contracts,” it said yesterday.
“However, net profit slid 25 per cent in line with 21 per cent lower revenue due to lower ATE sales as aforementioned and lower GP margin due to less economies of scale.
“In 1QFY20, Pentamaster’s ATE sales were more diverse, spanning across the automotive segment, 5G infrastructure and 3D sensing portfolio on top of its flagship ambient and proximity sensors test solutions.
“Telecommunications remains as the group’s largest customer segment, contributing 43 per cent of revenue in 1QFY20.
“However, higher sales to automotive as well as consumer and industrials segments which rose by 51 and 28 per cent y-o-y respectively have led to a more diverse portfolio for the group. This is in line with the group’s aim to diversify and increase its exposure to more industry segments.”
Currently, Pentamaster is working on producing low-cost ventilators for local hospitals and less developed countries. The product is currently in its prototyping stage and will be ready within the four weeks.
As it is an environmental, social and governance initiative, AmInvestment Bank said this would not contribute to the group’s income but there is a potential for Pentamaster to leverage the know-how relating to automation which could support its penetration into the medical segment in future.
“We expect the group’s 2Q to see a larger negative impact from Covid-19 containment measures, factoring in the impact of the movement control order in Malaysia as well as travel restrictions and logistic delays in many countries worldwide which have impacted Pentamaster’s project delivery timeline.
“This is despite the MCO being relaxed with the group being allowed to operate at 100 per cent of its workforce capacity as at April 29, 2020.”
On the plus side, AmInvestment Bank saw that the group has not seen any major cancellation of its orders but rather deferment of orders.