CIMB Research starts coverage on Pentamaster, target price RM5.40

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KUALA LUMPUR (April 29): CIMB IB Research has initiated coverage on Pentamaster Corp Bhd at RM4.23 with an “Add” rating and target price (TP) of RM5.40 and said Pentamaster could benefit from rising Vertical Cavity Surface Emitting Laser (VCSEL) adoption in smartphones, which is projected to drive global VCSEL sales volume by 5x over 2017-23F.

In a note April 26, the research house said Pentamaster is an exciting proxy for automation and shift towards smart manufacturing.

“Initiate coverage with an Add and RM5.40 TP, based on 17.8x FY20F P/E,” it said.

The research house said rising penetration of 3D sensing in smartphones, new customer wins in China and a weaker ringgit vs. US dollar are potential re-rating catalysts.

“Meanwhile, delays in 3D-sensing adoption in smartphones and intense competition are key downside risks,” it said.