Corp Bhd’s (Pentamaster) core net profit in 1Q24 (ex-unrealised forex gain of RM4.1m and loss in forward contracts of RM0.5m) reached RM15.8m, down 1% yoy and 33% qoq.
CGS International (CGS) in its Company Flash Note today (May 10) said revenue growth of 3% yoy was negated by higher operating expense (+5% yoy) and depreciation expense (+44% yoy); the latter related to Campus 3.0 expansion.
Medical segment continued to exhibit strong growth
The group saw strong growth from its medical segment, where revenue grew by fourfold yoy and 58% qoq, bringing the revenue mix to its highest-ever level at 46% in 1Q24 (12% in 1Q23). This was driven by accelerated factory automation solution (FAS) works for its main MedTech customer involved in the manufacturing of continuous glucose monitoring devices.
Revenue from automotive fell by 51% yoy and 24% qoq as demand for its automated testing equipment (ATE) remained soft amid a slowdown in electric vehicle demand in the US and European markets. Revenue mix fell to 26% in 1Q24, from 54% in 1Q23.
The electro-optical segment performance was surprisingly better, with revenue growing by 48% yoy, boosting the revenue mix to 17%, well above management’s FY24F overall guidance of a 9-10% revenue mix. This was led by stronger demand for its smart sensor test equipment catering to the mobile industry.
Expecting a sequential improvement
Despite a relatively weak showing in 1Q24, CGS believe Pentamaster’s net profit performance in subsequent quarters will be stronger on the back of an improvement in order visibility from the automotive segment, revenue ramp-up from new MedTech customers, and seasonal strength from the semiconductor industry.
CGS retains a Hold call with an unchanged TP of RM4.65.
