KUALA LUMPUR (March 31): AmInvestment Bank Bhd has initiated coverage on Pentamaster Corp Bhd with a fair value of RM4.45 and a “buy” call for shares of the automation specialist. AmInvestment said it likes Pentamaster due to its positive growth prospects.

In a note today, AmInvestment said Pentamaster is projected to achieve an impressive profit compound annual growth rate (CAGR) of 14% from financial year ended Dec 31, 2019 (FY19) to FY22 on growth in both its automated testing equipment and factory automated solutions segments.

"We initiate coverage on Pentamaster with a ‘buy’ recommendation. Our fair value of RM4.45/share is pegged to an FY21F PER of 19x, in line with its peer local equipment makers’ average forward PER. We expect the group to register core net profit earnings of RM99 million, RM111 million and RM124 million respectively for FY20F, FY21F and FY22F.

"We believe that Pentamaster’s medium-term prospects remain positive, despite expectations that its 1QFY20 would be impacted by Covid-19 as the group anticipates a V-shaped recovery in subsequent quarters based on its current order visibility. We like Pentamaster due to its positive growth prospects supported by demand for more smart sensors in devices, the upcoming 3D sensing technology wave, trend towards autonomous cars and electric vehicles (EVs) and the adoption of Industry 4.0,” AmInvestment said.

At Bursa Malaysia’s 12:30pm break today, Pentamaster shares settled up 16 sen or 4.26% at RM3.92 for a market capitalisation of RM1.86 billion. The stock saw some two million shares traded.