KUALA LUMPUR: Pentamaster Corp Bhd's near-term earnings potential remains bright, driven by heightened demand in the factory automation solutions (FAS) segment and the recovery in the semiconductor space in the early upcycle.
RHB Research said the automotive chip market is set to undergo exponential growth, with power semiconductor devices like silicon carbide (SiC), gallium nitride (GaN), and insulated gate bipolar transistors (IGBT) being in high demand, given the advent of electric vehicles (EVs).
The firm believes that several major semiconductor players are expected to continue investing in SiC manufacturing and fabrication facilities due to the proliferation of such semiconductor materials.
"Pentamaster's automated test and burn-in solutions for SiC- and GaN-related power modules should enable it to capitalize on this trend," it said.
Furthermore, RHB Research said this segment is set to see structural demand growth, driven by the rising need for automation across various industries and the ongoing advancements of Industry 4.0.
Currently, the medical industry is the main contributor to this division's growth – which Pentamaster intends to leverage.
"We forecast a three-year (financial year 2024 (FY24) 2026 earnings) compounded annual growth rate (CAGR) of 18.2 per cent, mainly driven by the growth of the medical devices unit, coupled with the recovery of the automotive and semiconductor segments.
"Initiate coverage with Buy and a target price of RM6.16," it added.