• Overview. PMB Technology (PMBT) 4Q22 revenue narrowed by 1.8% QoQ and 17.0% YoY to RM307.2mn on account of lower contribution from Manufacturing and Trading segment which fell by 35% due to the exceptionally high metallic silicon price in 4Q21. Its Construction and Fabrication segment contribution rose by 45% YoY however thanks to favourable progress in certain on-going projects. Core earnings dwindled by 22.6% in FY22 to RM118.2mn no thanks to lower selling price, rising raw material costs and foreign exchange loss.

• Key highlights. PMB Silicon (wholly-owned subsidiary) has executed an agreement with Syarikat Sesco Berhad in 4Q22, to revise Amended and Restated Power Purchase Agreement (“ARPPA”) to increase the existing supply of electricity at its factory located in Samalaju Industrial Park (“Silicon Facility”) from 104MW to 129MW. The additional power is expected to be fully drawn by April 2024. Note that PMBT acquired 124 acres industries land in the area in July 2022.

• Against estimates: Below. 12MFY22 core profit of RM118.2mn was below our forecast and consensus, accounting 81.8% and 72.1 of both estimates full year forecast, respectively.

• Dividends. No dividend was declared in view of its expansion plan.

• Earnings revision. We tweak our FY23-24F earnings by 2%-3% after a new assumption in operating cost and average silicon prices.

• Outlook. We remain sanguine on global silicon growth driven by robust demand from the EV, solar, auto and construction post economic re-opening However, headwinds namely prolonged Russia-Ukraine war and inflation risk may dampen outlook.

• Our call. Maintain a HOLD call on PMBT with TP of RM4.25 based on PER of 17x that is pegged to FY23F EPS of 24.9 sen.

Source: BIMB Securities Research - 28 Feb 2023