Highlights

PENTAMASTER

Author: YiStock   |   Latest post: Fri, 27 Apr 2018, 9:30 AM

 

Pentamaster - It's making lot of "SENSE'" Now (2) YiStock

Author:   |    Publish date:


Image result for iron man computer name

 

When the bursa sea is red, is good to off the trading platform and relook the company I have invested in. Reason is to reaffirm myself that i'm investing in a right company. It helps to mitigate the fear. 

I have written an article about Pentamaster back in 12 Sept 2017. My biggest question on Pentamaster HK listing is still

WHAT IS IN IT FOR ME?

 

On 26 march 2018, The edge has published an article after inverviewing the Director of Pentamaster. The key finding inside the article i extracted and as below:

As far as i know, Apple is the front runner of 3D sensing. Reuters claimed that Apple is in lead of at least 2 years ahead rivals on this technology. https://www.reuters.com/article/us-apple-android-suppliers-analysis/apple-grabs-two-year-lead-in-3d-sensing-race-idUSKBN1GW0GA. From this report, we can see also other phone makers are also going into same dicrection. Including major phone players in China. Probably 1 of the key reason promted Penta's listing in HK.

Well, one might start thinking the Apple X is not selling well, and will not be selling well. See below, expecting 40% of smart devices will be equiped with 3D camera. Plus, 3D sensing will also be used in upcoming mega automotive trend, i will explain why later.

 

How i get a clue on Pentamaster is major beneficiary in sensor mega trend, and in particular 3D Sensor?

 

Let check back the financial reports:

 

         
         
    Automated Equipment Manufacturing solution Smart Control Solution
2016 Q1 REV 23,042 8,012 476
  PAT 3,520 509 -447
         
2016 Q2 REV 29,585 8,182 3,548
  PAT 4,531 2,360 1,272
         
2016 Q3 REV 19,647 19,089 1,862
  PAT 5,892 2,553 -421
         
2016 Q4 REV 31,548 8,746 3,425
  PAT 14,267 -492 391
TOTAL REV 103,822 44,029 9,311
  PBT 28,210 4,930 795
         
2017 Q1 REV 43,094 3,128 1,598
  PAT 11,010 -2,053 -559
         
2017 Q2 REV 40,633 16,867 3,968
  PAT 6,523 5,364 749
         
2017 Q3 REV 72,731 9,430 3,007
  PAT 13,337 -1,312 -219
         
2017 Q4 REV 79,646 19,790 4,405
  PAT 13,937 2,612 1,139
TOTAL REV 236,104 49,215 12,978
  PBT 44,807 4,611 1,110
         

For easy reference, i focus on Automated Equipment segment.

In 2017 1H, Pentamaster recorded a total revenue RM 83.7 mil revenue against RM 52.6 mil in 2016 1H. A jump of approximately 60%.

In 2017 2H, Pentamaster recorded RM 152.4 mil revenue against RM 51.2 mil in 2016 2H. A jump of massive 198%

Pentamaster rallied all the way close to RM 3.20 before Donald Trump making enough trouble, plus recent tech stock sell down. 

To me i view the price now super attractive.

Of course, i need to know (1) what caused the big jump in Revenue and, (2) more concrete evident if such massive jump in Revenue is sustainable

I can't find any clue what triggered the massive revenue jump via quarter report. The report only mentioned sensor sensor and sensor. 

To confirm this,  i did a search in HK PIL listing prospectus.  And i found below info (Please note that the prospectus is only comparing 1H 2016 vs 1 H2017; so it involves a lot of guesstimate, as usual)

 

 

(1) The above customer E is listed in Swiss, so i pretty sure IT IS NOT APPLE!

(2) Total RM 59.23 mil revenue from this customer E or 61.3% (pretty big percentage)

 

 

(3) From above description, I think we are 99.9% sure, the company is Heptagon, a jan 2017 acquired company by AMS AG, one of the biggest Sensor company in the World. http://www.eenewsanalog.com/news/ams-pay-850-million-optical-business-0

If you are an investor of Gtronic, you should know this company. 

 

Image result for ams heptagon princeton

 

Image result for ams heptagon princeton

The above 3 make Apple 3D Camera possible.

How about other function? Example:

https://www.youtube.com/watch?v=XA7FMoNAK9M

 

Now, Is Pentamaster recent revenue surge sustainable? 

The surge in Pentamaster Revenue for FY 2017 i believe is from AMS's heptagon expansion for their Ang Mo Kio facility.

 

On 20 Sept 2017, AMS annouced it will further expand it regional manufacturing facility in singapore Tampines. The investment amount is expected to be USD 200 mil (RM 800 mil)

 

 

Based on above date, I believe Pentamaster should continue to benefit from AMS singapore expansion and IT IS URGENT! Reason i say so:

(1) AMS AG's Guidance

(2) Gtronic latest release quarter earning report guidance:

(3) The director's guidance

(4) Aminvest Guidance of more RM 300 mil Order book as of Q1 2018 

https://www.thestar.com.my/business/business-news/2018/04/10/automation-and-test-equipment-to-boost-pentamaster-earnings/

 

THE FUTURE OF SENSOR

Pentamaster should continue to expand together with AMS since their relationship has been established since 2009. I have extracted some key info from AMS AG website. AMS AG key focus expansion should be on:

(1) 3D sensing

(2) Enviroment & Audio sensing 

 

Out of 3D sensing, AMS highlighted the pontential of 3D sensing application:

 

Thats all, for current business prospective of PENTAMASTER.

 

Next, let talk about China and the important of listing in HK.

One of the news hottest in town today is the ZTE. Normally when there is a threat, there is always  an opportunity. 

I foresee a MEGA TECH RACE BETWEEN CHINA & USA all the way to 2025.

 

Image result for zte ban

 

According to article purblished in December 2017 by SEMI, Semiconductor Equipment forecasted for China for 2018 is amounted to USD 11.33 billion or a growth of 49% compared to previous years. Followed by North America USD 7.38 bil  or a growth of 33%. These 2 market continue to be major growth region for the semiconductor equipment. 

 

I attended previous EGM. Pentamaster is grabbing BOTH piece of cake via HK listing.

 

The director in his press interview has constantly highligted the listing in HK is to gain good publicity to mainland marketI suppose the above growth data/ forecast is the reason for his HK listing decision. 

With the strong growth story, I hope the impact of the dilution of earning, perhaps can be mitigated. 

Most importantly, being a equipment manufacturer, Pentamaster is not suppose to be that sensitive on seasonal up down of Apple directly. Simply because, AMS need to get the production capacity and capability ready for peak season. Obviously AMS cannot wait till last minute and tell penta to deliver equipment. Further more, AMS is not 100% on Iphone X. It got so many area of usage for it's sensor product. Another fear that trigger by clueless factor?

This is how i think.

Cheers,

YiStock

 
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  7 people like this.
 
value88 If sensor market is going to have tremendous growth rate as u found out above, why not invest into Globetronics which produces the sensors for AMS/Heptagon ? Isn't Globetronics can benefit directly and more from the growing sensor market ?
27/04/2018 5:20 PM
YiStock penta is supplying equipment to ams/heptagon. I believe also supply to gtronic. While equipment supply is less sensitive to end product demand cycle, therefore current slow demand on sensor will affect gtronic more in short term. Penta will less like affected and should continue to supply equipmenet based on order. Obviously AMS need to quickly ramp up production to standby for 2H.
27/04/2018 7:53 PM
Abismail https://www.bloomberg.com/news/articles/2018-04-24/apple-supplier-ams-s-outlook-spurs-fears-of-weak-iphone-x-demand

penta customer
27/04/2018 8:00 PM
YiStock https://appleinsider.com/articles/18/02/14/rear-facing-3d-sensing-technology-possibly-slated-for-fall-2019-iphone-allowing-apple-to-press-ar-advantage
02/05/2018 12:39 PM


 

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