• Overview. PMB Technology (PMBT) 3Q22 revenue surged by 20.2%  QoQ and 54.3% YoY to RM312.8mn on account of higher turnover from key segments. Manufacturing and Trading segment revenue jumped by 54% YoY thanks to higher sales of metallic silicon while  Construction and Fabrication segment contribution rose by +56% YoY lifted by the progress of certain on-going projects. Even so, core earnings dwindled by 33.9% YoY to RM18.1mn no thanks to rising raw material costs, operating expenses and foreign exchange loss. This compressed its EBITDA margin lower or to 11.7% versus 23.4% in  3Q21.

• Against estimates: Below. 9MFY22 core profit of RM18.1mn wasbelow our forecast and consensus, accounting 66% of both estimates full year forecast.

• Dividends. No dividend was declared till date given PMBT expansion plan for metallic silicon plant.

• Earnings revision. We tweaked down our FY22F earnings by 11.7% toRM145mn after incorporating a revision in operating cost and average silicon prices. FY23 and FY24 assumptions remain unchanged at this juncture.

• Outlook. We remain optimistic on global silicon growth driven by robust demand from China apart from government supports and incentives in RE segment. However, we remain mindful on prolonged  Russia- Ukraine war which could push the global oil price to remain elevated. The rapid advanced economies (AEs) interest rate tightening, on the hand, could push Ringgit to remain weak.

• Our call. Maintain a HOLD call on PMBT with a TP of RM4.11 based on PER of 17x that is pegged to FY23F EPS of 24.2 sen.

Source: BIMB Securities Research - 30 Nov 2022