Pantech set for growth on global oil and gas spending

PETALING JAYA: Pantech Group Holdings Bhd’s prospects are expected to be supported by the anticipated resilience in global capital expenditure (capex) within the oil and gas sector.

According to TA Research, Pantech’s core net profit for the nine-month period of financial year 2025 (9M25) stood at RM91.3mil, reflecting a 30.8% year-on-year (y-o-y) increase.

This accounted for 92% of its full-year estimate and 82% of consensus forecasts.

The research house noted the stronger- than-expected performance of the trading division, which saw increased revenue from higher sales deliveries to the local oil and gas industry.

Additionally, improved earnings before interest and taxes (Ebit) were driven by lower operating costs, boosting the operating margin by 2.5 percentage points on a quarter-on-quarter (q-o-q) basis.

“On a year-on-year (y-o-y) basis, Pantech’s pre-tax profit for the third quarter (3Q) of financial year 2025 (FY25) increased by 2% y-o-y, primarily impacted by the stronger performance from the trading division.

“The trading division’s Ebit increased significantly by 42.9% y-o-y, driven by higher sales delivery to the local oil and gas industry and better product mix,” TA Research said in a report.

However, the group’s manufacturing division recorded a 16.9% y-o-y decline in Ebit, mainly due to losses incurred by its overseas manufacturing plant.

This came despite a 9.6% y-o-y increase in the division’s revenue, primarily due to higher export sales from the stainless steel manufacturing plant.

TA Research noted that global capex in the oil and gas sector is projected to remain resilient, supported by steady oil prices (Brent crude oil forecast for 2025: US$75 per barrel) and sustained investments in facility maintenance, upgrades and development projects.

“This trend is likely to boost demand for related products and services worldwide,” the research house said.

Meanwhile, Pantech has announced plans to list its wholly-owned subsidiaries in the manufacturing division, Pantech Stainless & Alloy Industries Sdn Bhd (PSA) and Pantech Steel Industries Sdn Bhd (PSI), on the Main Market of Bursa Malaysia via a special-purpose vehicle, Pantech Global.

Post-initial public offering (IPO), Pantech will retain a 69.15% stake in Pantech Global.

“For FY24, Pantech Global reported a profit after tax of RM49.7mil. We estimate a listing valuation of 10 to 12 times price-to-earnings (PE) multiple, translating to a market capitalisation of RM500mil to RM597mil.

“The IPO proceeds are expected to support future earnings growth through expansion, though this potential has not yet been incorporated into our projections,” TA Research said.

It maintained its “buy” call on the stock with a target price of RM1.28 per share.

The research house said Pantech remains an attractive dividend play, offering a yield of over 5% for FY25 to FY27, supported by a free cash flow yield of above 10%.

The group proposed a third interim dividend of 1.5 sen per share for the 3Q of FY25, marking its 12th consecutive payout at this level.

Meanwhile, Phillip Capital Research said Pantech’s 9M25 core net profit of RM84mil was in line with its and market’s expectations, accounting for 73% and 78%, respectively, of full-year forecasts.

It maintained a “buy” call on Pantech with a target price of RM1.30 per share.

Key risks to its call include lower demand for pipes, valves and fittings, project delays and higher operating costs.