Company Coverage
Pentamaster Corp (PENT MK): 2Q26: Trudging Through 2026; Accelerating In 2027
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM5.71
RM5.20
-8.9%
RM4.20
Analyst
Highlights
- Pentamaster’s results were below expectations due to higher tax rates following the expiry of Pioneer tax incentives.
- That said, orderbook has improved to RM550m (+15% qoq) anchored mainly by the AI compute and medical segments.
- Trim 2026 earnings by 10% to reflect higher tax rates. Maintain HOLD. Target price: RM5.20.
Analysis
- Below expectations. Pentamaster Corporation (Pentamaster) reported a 2Q26 core net profit of RM11.0m (-28% qoq, -42% yoy), bringing 1H26 to
RM26.3m, accounting for 38%/32% of our/consensus full-year estimates respectively. The shortfall was mainly due to a higher-than-expected tax rate of 19.3% in 2Q26 (vs 4.7% in 1Q26) due to the expiry of pioneer tax incentives.
- Note that the core net profit has been adjusted for: a) an unrealised forex gain of RM14.7m, b) one-off loss from changes in FV of foreign currency forward contracts, and c) inventory net reversal.
- 1H26 revenue grew 31% yoy, as robust growth in the factory automation solutions (FAS) (+119% yoy) was more than offset by a 24% yoy decline in automated test equipment segment revenue. By end-market, sales to the electro optical, medical and semicon segments rebounded strongly (+95%, +66% and +66% yoy, respectively), driven by recovering demand for FAS and test handling solutions. However, the automotive segment – previously the largest contributor in 2025 – saw its revenue plunge 58% yoy, mainly due to the timing of project deliveries. While PBT grew by a wider 62% yoy on better operational efficiency, core net profit dropped 7% on higher tax rates on unfavourable forex translations.
- Qoq, revenue came in flat, as strong sales contribution from consumer & industrial was negated by softer sales in the automotive and electro-optical segments. While PBT improved by 27%, core net profit dropped by 28% qoq on higher tax rates (following the expiry of tax incentives granted by MIDA to Pentamaster Technology (PTSB) and Pentamaster Equipment Manufacturing), after stripping out unrealised forex gains. Note that the group has obtained approval for a new tax incentive (70% of PTSB’s statutory income for five years) relating to its advanced packaging and advanced photonics equipment initiatives under the ATE segment.
- Orderbook grew to RM550m; pivoting towards high growth sectors. Pentamaster’s 2Q26 orderbook grew 15% qoq to RM550m (rolling basis) anchored mainly by the AI compute and medical segments which would remain key growth drivers for the group in 2026. The group continues to strengthen its capabilities in advanced packaging technologies, underpinned by accelerating demand in AI, HPC, and other data-intensive, high-speed applications. These structural trends provide a favourable backdrop for longterm growth, positioning Pentamaster to capitalise on next-generation technology opportunities over the medium to long term.
Highlights
- Pentamaster’s results were below expectations due to higher tax rates following the expiry of Pioneer tax incentives.
- That said, orderbook has improved to RM550m (+15% qoq) anchored mainly by the AI compute and medical segments.
- Trim 2026 earnings by 10% to reflect higher tax rates. Maintain HOLD. Target price: RM5.20.
Analysis
- Below expectations. Pentamaster Corporation (Pentamaster) reported a 2Q26 core net profit of RM11.0m (-28% qoq, -42% yoy), bringing 1H26 to
RM26.3m, accounting for 38%/32% of our/consensus full-year estimates respectively. The shortfall was mainly due to a higher-than-expected tax rate of 19.3% in 2Q26 (vs 4.7% in 1Q26) due to the expiry of pioneer tax incentives.
- Note that the core net profit has been adjusted for: a) an unrealised forex gain of RM14.7m, b) one-off loss from changes in FV of foreign currency forward contracts, and c) inventory net reversal.
- 1H26 revenue grew 31% yoy, as robust growth in the factory automation solutions (FAS) (+119% yoy) was more than offset by a 24% yoy decline in automated test equipment segment revenue. By end-market, sales to the electro optical, medical and semicon segments rebounded strongly (+95%, +66% and +66% yoy, respectively), driven by recovering demand for FAS and test handling solutions. However, the automotive segment – previously the largest contributor in 2025 – saw its revenue plunge 58% yoy, mainly due to the timing of project deliveries. While PBT grew by a wider 62% yoy on better operational efficiency, core net profit dropped 7% on higher tax rates on unfavourable forex translations.
- Qoq, revenue came in flat, as strong sales contribution from consumer & industrial was negated by softer sales in the automotive and electro-optical segments. While PBT improved by 27%, core net profit dropped by 28% qoq on higher tax rates (following the expiry of tax incentives granted by MIDA to Pentamaster Technology (PTSB) and Pentamaster Equipment Manufacturing), after stripping out unrealised forex gains. Note that the group has obtained approval for a new tax incentive (70% of PTSB’s statutory income for five years) relating to its advanced packaging and advanced photonics equipment initiatives under the ATE segment.
- Orderbook grew to RM550m; pivoting towards high growth sectors. Pentamaster’s 2Q26 orderbook grew 15% qoq to RM550m (rolling basis) anchored mainly by the AI compute and medical segments which would remain key growth drivers for the group in 2026. The group continues to strengthen its capabilities in advanced packaging technologies, underpinned by accelerating demand in AI, HPC, and other data-intensive, high-speed applications. These structural trends provide a favourable backdrop for longterm growth, positioning Pentamaster to capitalise on next-generation technology opportunities over the medium to long term.
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM5.71
RM5.20
-8.9%
RM4.20
Analyst
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