PENTAMASTER CORPORATION BERHAD (PCB OR THE COMPANY) - INCORPORATION OF A WHOLLY-OWNED SUBSIDIARY COMPANY BY PENTAMASTER EQUIPMENT MANUFACTURING SDN.BHD.
The Board of Directors of PCB wishes to announce that PENTAMASTER EQUIPMENT MANUFACTURING SDN. BHD. (“PQ”), an indirect wholly-owned subsidiary of PCB, has incorporated a wholly-owned corporation, Pentamaster Equipment Manufacturing, Inc. (“PEMI”), in the state of California, the United States of America.
PEMI was incorporated on 18 January 2018 and is authorised to issue a total of 10,000 shares of Common Stock. PQ has on 8 February 2018 remitted USD10,000.00 to PEMI as capital contribution with the result that PEMI currently has an issued and paid up capital of USD10,000.00 comprising of 1,000 shares of Common Stock of USD10.00 each, all held by PQ. The principal activity of PEMI is provision of sales and technical support. PEMI was incorporated for the purpose of providing closer sales and support services to the customers of Pentamaster International Limited and its subsidiaries based in the United States of America.
None of the Directors and/or major shareholders of PCB or persons connected to them have any interest, direct or indirect, in the incorporation of PEMI.
This article first appeared in The Edge Financial Daily, on March 26, 2018.
GEORGE TOWN: Pentamaster Corp Bhd (PCB) hopes to declare dividends in two years’ time on the back of a robust growth in its business following the recent listing of its 63.1%-owned automated solutions arm, Pentamaster International Ltd (PIL), on the Hong Kong Stock Exchange (HKEX).
“At the moment, we need to use the cash reserves to build the company,” group chairman Chuah Choon Bin told The Edge Financial Daily. “We are at a growing stage now, at a teenager level, but once we are strong we will give dividends to shareholders. Give us one or two years, it is not a long way.”
Chuah stressed the need to grow the value of the group’s stock based on expansion plans, its RM280 million cash reserves and near zero gearing — a far cry from the 2008 to 2011 period when it owed banks up to RM80 million.
PCB’s share price hit a record high of RM3.09 on Dec 27 last year after announcing that the listing of PIL will take place on Jan 19. The stock has since pared some of the gains, closing at RM2.15 last Friday, with a market capitalisation of RM680.66 million. In a year, the stock has risen 108.68%.
“I think what is important is that we increase the value of the stock by expanding the business, do more research and development (R&D) to develop solutions for the market rather than pay dividend now,” said Chuah.
PIL’s listing on Jan 19 raised RM192 million, of which RM92 million would go towards PIL’s business activities, leaving RM100 million to be used for PCB’s expansion, which includes the establishment of a R&D plant in China that will hire optic and electronic engineers, and a technical sales office in the US. There are also plans to set up a manufacturing plant.
Chuah said gaining China’s attention was one of the key aims of PIL’s listing on HKEX. “Since our listing, we have gained a lot of visibility in Hong Kong and China, not to mention it is also easier to raise funds there,” he said.
“Currently, 50% of our exports go to mainland China, including to US-based multinational corporations located there. We expect the exports to rise to 60% in the near future. The business opportunity is great which is why we are expanding our facilities,” he added.
Penang-based PCB is using the money raised to also build a new plant with a 100,000 sq ft floor space in Batu Kawan, and expand its current facility in Bayan Lepas by 20% to 120,000 sq ft, while acquiring a medical company in Malaysia.
The expansions would cater to its intelligent automated robotic manufacturing (IARM) business for single use medical devices that would start soon, with some 5% contribution expected to the financial year ending Dec 31, 2019 (FY19).
PCB develops automated test equipment (ATE) solutions involving equipment and handler to test smart sensor components for smart devices used in the telecommunication and automotive segments. It also develops automated manufacturing solutions (AMS) for IARM, which is a total factory solution, apart from general semiconductor parts such as integrated circuit devices.
The ATE solution for smart devices in the telecommunication sector contributes over 60% to its revenue while the automotive segment’s contribution will rise to more than 15% to FY18 from 6% last year.
The group has an order book of more than RM250 million as at Dec 31, 2017, said Chuah, adding that orders for the first quarter of 2018 have stacked up, boosting his confidence of another double-digit growth in revenue in FY18.
“We are actually operating overcapacity now. There is business to be harvested but we are facing lack of space and engineers. However, the new plant is expected to be operational by the middle of this year.
“We hope to hire optic and electronic engineers in Taiwan or China. When our R&D centre is up and running, we would be able to develop better solutions for the market,” he added.
For FY17, Pentamaster’s net profit rose 33.08% to RM35.97 million from RM27.03 million a year earlier, on increased demand from ATE and AMS segments. Revenue surged 87.04% to RM284.19 million from RM151.94 million.
In the past three years, the compound annual growth rate for the group’s revenue and profit after tax was 23.3% and 69.8% respectively.
Pentamaster’s recent double-digit growth and the listing of PIL caught the eye of Kumpulan Wang Persaraan (Diperbadankan) (KWAP) which has raised its stake in PCB to 11.62%, making it a major shareholder.
“I think KWAP is seeing the potential in the future of technology we are in — 3D sensing. It is going to be used a lot in autonomous cars and electric vehicles. We have developed a 3D sensor testing capability to test the component that can be used in telco, automotive and smartphones,” said Chuah.
He said five years ago, PCB only focused on automotive handlers without test solutions, which “anyone could do”, so he built the handler with tester as a complete ecosystem to reduce competition.
“We are also looking to secure more IARM business from the US. We have secured a few now. This segment has a lot of growth potential because of Industry 4.0 where factories look to becoming fully automised.
“Our technical sales unit in Sunnyvale, US, would be able to discuss with clients regarding requests for quotations and proposals. Proximity to our clients is key, hence we see our US business growing. More so now with the US placing 30% tariff on raw materials which would make manufacturing in US expensive,” he added.
For QE31/3/2018, Penta's PBT increased by 23% q-o-q or 76% y-o-y to RM16.5 million while revenue rose 1% q-o-q or 109% y-o-y to RM99 million.
Revenue rose marginally q-o-q mainly due to increase in sales from automated equipment. Taking into account the non-recurring expenses of RM7.1 million, the Group recorded a profit before taxation of RM16.5 million in the current quarter. Should the effects of the non-recurring expenses be excluded, the Group would have exhibited a profit before taxation of RM23.6 million which is RM7.1 million or approximately 42.9% higher than the adjusted profit before taxation of RM16.5 million achieved in the preceding quarter. Profit before taxation increased by 42.9% as compared to the lower increase in revenue of 0.9%, mainly due to better margin secured from projects delivered to customers and higher gain from changes in fair value of the foreign currency forward contracts in the current quarter.
Table: Penta's last 8 quarterly results
Graph: Penta's last 21 quarterly results
Valuation
Penta (closed at RM2.31 yesterday) is now trading at a PER of 21 times (based on last 4 quarters' EPS of 11.24 sen). Based on the earning growth of 14% last year, Penta's PEG ratio of 1.5 times is deemed reasonable.
Technical Outlook
Penta broke above its downtrend line, SS at RM2.10 in May. It may begin its next upleg soon. Immediate support & resistance are at RM2.20 & RM2.40 respectively.
Chart: Penta's weekly chart as at May 22, 2018 (Source: ShareInvestor.com)
Conclusion
Based on good financial performance, reasonable valuation and mildly positive technical outlook, Penta is a good stock for long-term investment.
NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS)
BONUS ISSUES
Description
PENTAMASTER CORPORATION BERHAD ("PCB" OR THE "COMPANY")PROPOSED BONUS ISSUE OF UP TO 158,292,712 NEW ORDINARY SHARES IN PENTAMASTER CORPORATION BERHAD ("PCB SHARES") ("BONUS SHARES") ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY TWO (2) EXISTING PCB SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED AND ANNOUNCED LATER ("PROPOSED BONUS ISSUE")
The Board of Directors of PCB wishes to announce that the Company is proposing to undertake a bonus issue of up to 158,292,712 new ordinary shares in PCB on the basis of one (1) Bonus Share for every two (2) existing PCB shares held on an entitlement date to be determined and announced later.
Please refer to the attachment for further details.
BONUS ISSUE OF UP TO 158,292,712 NEW ORDINARY SHARES IN PENTAMASTER CORPORATION BERHAD ("PCB SHARES") ("BONUS SHARES") ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY TWO (2) EXISTING PCB SHARES HELD BY SHAREHOLDERS OF PCB WHOSE NAMES APPEAR ON THE RECORD OF DEPOSITORS AS AT 5.00 P.M. ON 27 JUNE 2019
Period of interest payment
to
Financial Year End
31 Dec 2019
Share transfer book & register of members will be
to closed from (both dates inclusive) for the purpose of determining the entitlement
Registrar or Service Provider name, address, telephone no
SECURITIES SERVICES (HOLDINGS) SDN BHD (PENANG)Suite 18.05, MWE PlazaNo. 8 Lebuh Farquhar10200Tel:042631966Fax:042628544
Payment date
a.Securities transferred into the Depositor's Securities Account before 4:30 pm in respect of transfers
27 Jun 2019
b.Securities deposited into the Depositor's Securities Account before 12:30 pm in respect of securities exempted from mandatory deposit
c. Securities bought on the Exchange on a cum entitlement basis according to the Rules of the Exchange.
Number of new shares/securities issued (units) (If applicable)
PENTAMASTER CORPORATION BERHAD ("PCB" OR THE "COMPANY")PROPOSED ACQUISITION OF TP CONCEPT SDN. BHD. BY PENTAMASTER EQUIPMENT MANUFACTURING SDN. BHD., A WHOLLY OWNED SUBSIDIARY OF PENTAMASTER INTERNATIONAL LIMITED, WHICH IN TURN IS A SUBSIDIARY OF PCB
The board of directors of Pentamaster Corporation Berhad ("PCB" or the “Company") is pleased to announce that Pentamaster Equipment Manufacturing Sdn. Bhd., a wholly owned subsidiary of Pentamaster International Limited, which in turn is a subsidiary of PCB, on 26 September 2019, entered into a share sale agreement with all the existing shareholders of TP Concept Sdn. Bhd. (“TP”) to acquire 100% equity interest in TP comprising 250,000 ordinary shares each fully paid up for a total purchase consideration of Ringgit Malaysia twenty one million (RM21,000,000) only.
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