KUALA LUMPUR (Aug 19): CGS-CIMB Research has raised its target price for Pentamaster Corp Bhd to RM4.20 from RM3.60 after the group posted higher earnings in both the second quarter ended June 30, 2019 and first half of 2019.
The research unit also maintained its 'add' call on the technology firm.
"1H19 core net profit beat our/consensus' expectations at 54%/52% of FY19 net profit forecasts, due to higher-than-expected margin delivery in 2Q19," CGS-CIMB Research said.
Pentamaster's net profit in the cumulative six months of this year rose 84.7% to RM39.11 million from RM21.17 million a year ago.
Meanwhile, its net profit for the second quarter grew 40.11% to RM19.54 million from RM13.95 million a year earlier on improved operating efficiency.
Quarterly revenue was up 18.03% to RM120.74 million from RM102.3 million a year ago, on the back of higher sales from both the automated test equipment (ATE) and factory automation solutions (FAS) operating segments.
As such, CGS-CIMB Research said it has raised its FY19-FY21 earnings per share by 6%-7% to reflect improving margins from newer testing equipment and stronger interest income.
"We expect better earnings delivery in 2H19 driven by new tester for vertical cavity surface emitting laser (VCSEL) wafer level testing and burn-in machine, higher utilisation of Batu Kawan plant and positive momentum in 3D-sensing adoption in Android-based smartphone players," it said.