Frontken - Share Price 2.98, Fair Price - (29 May 2021) - FAIR PRICE - 0.856

 Introduction

A service provider of advanced precision cleaning and surface treatment for semiconductor process chamber parts and repair and maintenance services for the oil and gas industry.

Financial Summary

In Year 2020 AR, Frontken mentioned that the Oil and Gas sector due to Covid is delaying the repair and maintenance. Although YR 2020 has lockdown, the company still able to generate high revenue. 

Segmentation

Customer mainly on Taiwan and Semicon is the biggest contribution to the group revenue. 

Total Revenue - 368mil, taiwan contributed - 63percent of the revenue. 

Major customer - TSMC , contributed 132mil, 35percent of total revenue! 

Forward looking

The company is optimistic on the future prospect. 

Q1 2021 Report (Jan to Mar 21)

Income statement

First glance at this report, nothing to criticize. Revenue increased 22 percent and PBT increased 42 percent. Profit margin before increased from 30% to 34%. 

Balance Sheet 

Cash rich company with 300millions on hand with no debt. NAV remains the same. 

Healthy cash flow, generate positive operating activities and FCF. 

My opinions

Current price - 2.98

EPS  - 2.19 x 4 

P/E = 34 

Dividend - 0.04 

Dividend yield - 1.34% 

Fair value with 13percents CAGR - 0.856.

Overvalued stock, major customer TSMC contributed 35%. 

Very important to look at CAPEX, due to technology change everyday, company need to keep upgrade their technology to ensure they able to follow to trend else will be eliminate by other competitors. 

PENTAMASTER - PRICE 5.75, fair value - RM3.73

Introduction

Penta is a ATE company, they provide solution to others company thru the test equipment and the ATE business contributed 68% and Factory Automation solution (FAS) , industry 4.0 contributed 40% of the revenue in 2020. Penta planned to get ISO13485 cert by 2021. 

• Electro-Opto Smart Sensor 

• Automotive Semiconductor 

• Single-Use Medical Devices 

• Consumer & Industrial Products

Financial Summary

Year 2020 revenue and profit drop due to Covid issue. For the chart, we can observed that the revenue and PAT keep increasing. 

Segmentation

Penta has newly created a new station called MedQ is for medical devices. Strongly believed that the medical devices dept will grow. 

 

Balance Sheet

Look at the balance sheet, the trade receivable is indeed worrying as it grow 2x compared to 2019 where the revenue drop but receivable is increase drastically. Meanwhile, the trade payable also increased 2x. The company is in net cash position. Company has a healthy cash flow.

My thought:

Price:5.74

PAT: 112,258,000

Profit attribute to owner - 70,885,552

Ordinary shares- 712,317,121

Equity - 705,303,748

EPS - 0.099 (2020)

EPS (2019) - 0.11658 x 20 (PEG) or (32) = 2.33 or 3.73 (Fair value)

P/E - 58

ROE - 70,885,552 / 705,303,748 = 9.9

2019 as base

2Y Growth EPS - 20

3Y Growth EPS - 32

5Y Growth EPS- 90