Pantech to see continued upward momentum despite poorer results

Pantech Group Holdings Bhd has surged some 48.7% in the past year to close at RM1.10 on June 10.

The pipe-and-valve maker appears to have room for further upside with follow-through buying, lifting the share price to resistance levels of RM1.20 and RM1.24.

It has been a good build up for the counter, which was trading at a 52-week low of 71 sen a year ago.

Interestingly, the group is looking at spinning off two subsidiaries on Bursa Malaysia via a special purpose vehicle (SPV).

Its 2 subsidiaries are Pantech Stainless & Alloy Industries Sdn Bhd and Pantech Steel Industries Sdn Bhd.

But these plans are still at the preliminary stage.

Pantech Stainless & Alloy specialises in producing high quality stainless steel welded pipes and butt-weld fittings.

Established in 2010, the group said its products have been exported to more than 26 countries to date.

Its products are widely accepted by the oil and gas, refineries, water treatment, pulp and paper, pharmaceutical, chemical and petrochemical industries.

Meanwhile, Pantech Steel manufactures carbon steel butt welded fittings, pipe fittings and high frequency induction long bends for the oil and gas industry, marine and shipyard, petrochemical and power plant.

Incorporated in 2000, it operates its own factory and warehouse in Meru, Klang with a built-up area of more than 32,000 sq m.

Financially, Pantech does not look good.

Its net profit dropped 16.85% to RM76.55 million for the nine months ended Nov 30, 2024 from RM92.06 million a year ago.

Revenue declined 14.71% to RM716.95 million from RM840.6 million.

Despite the poorer results, analysts are sanguine on the outlook for Pantech.

This stems from expected stronger oil prices, driving capital expenditure at upstream activities and increase demand for Pantech’s products.

The oil and gas sector remains a key contributor for Pantech, consistently making up more than 50% of its revenue.

What is going to boost Pantech’s earnings is the elevated oil prices and translates to higher share price. Should the losing of its 2 subsidiaries go through, this will help unlock the value ot the group as well.