Frontken poised to record multi-year earnings growth

PETALING JAYA: Frontken Corp Bhd’s unique exposure to leading-edge semiconductor front-end supply chain remains positive, and will continue to drive the company’s growth.

According to Hong Leong Investment Bank (HLIB) Research, Frontken is likely to register multi-year growth ahead on the back of sustainable global semiconductor market outlook, robust fab investment, leading edge technology (seven nanometres and below), and strong balance sheet with net cash of Rm332mil or 21 sen per share to support its

Taiwan expansion.

The brokerage reiterated its “buy” call for Frontken, with an unchanged target price of RM3.20, after the group’s results met the research house’s expectations.

HLIB said, in a note yesterday, that Frontken’s high core net profit of Rm29mil, which was down 7% quarter-on-quarter and up 30% year-on-year (y-o-y), for the first quarter of 2022 (1Q22) was in line with expectations.

“While sequential weakness was due to seasonality, the y-o-y performance was solid thanks to strong orders for semiconductor in

Taiwan as well as oil and gas in Malaysia,” HLIB pointed out.

“Frontken believes that the projected substantial increase in production by the semiconductor companies and persistent higher demand of chips will be a boon for its business for years to come,” it added.

Meanwhile, Maybank Investment Bank Research maintained its “buy” call on Frontken, with a target price of RM3.55.

“Results were within expectations; we are expecting Frontken’s earnings to remain strong,” it said.