KUALA LUMPUR (July 24): JF Apex Securities Research has downgraded Pantech Group Holdings Bhd to “Hold”with an unchanged target price of 80 sen and said the company’s 1QFY16 revenue improved 6.1% year-on-year (y-o-y) and 6.9% quarter-on-quarter (q-o-q) to RM138.6 million following higher sales from trading division (+8.4% y-o-y and +14.3% q-o-q to RM81.6 million) coupled with flat revenue from manufacturing division (+3% y-o-y and -2.1% q-o-q to RM57.1 million).

In a note today, the research house said first quarter performance came within expectation as revenue achieving 26% of our full year estimate while net profit accounted for 19% of our FY16 forecast.

“We expect earnings to pick up towards end-FY16 on contribution from RAPID.

“We are positive on the company’s long term potential. To recap, during the Lehman crisis, its FY08 revenue and net income dropped to RM313.3 million and RM34.1 million but increased significantly to RM511.6 million (+63%) and RM61.5 million (+80%) respectively in FY09 following the recovery in oil price.

“Contribution from RAPID is expected to start pouring in late 2016 with Pantech tendering around RM500 million worth of contracts for pipes, valves and fittings,” it said.