Latest news with #Frontken
The Star
5 days ago
- Business
- The Star
Semiconductor shares slide as Trump announces 100% tariff on chip imports
KUALA LUMPUR: Bursa Malaysia started on a flattish note although technology stocks were seen pulling back on news the US was imposing a 100% tariff on semiconductors imported into the country. As trading commenced on the Malaysian stock market, semiconductor-related companies were on the backfoot, including Frontken down seven sen to RM4.29, Pentamaster diving 14 sen to RM3.60 and Unisem shedding six sen to RM2.31. The sector decline was at odds with the country's blue-chip FBM KLCI, which hovered in slightly positive territory at 1,540.4 points minutes into trading. Malacca Securities said investors are expected to stay cautious following US President Donald Trump's announcement of the semiconductor tariff. This is depite an overnight recovery on Wall Street, coupled with a US rate cut expectation in September. On sectors, the research firm said the construction and utilities sectors should be benefiting from the data centre developments and mega infrastructure projects in the country. It added that the recent overnight policy rate cut may boost the interest for the REIT and property sectors, such as Sunway REIT, IGB REIT and EcoWorld. In healthcare, Malacca Securities favours KPJ Healthcare due to its brownfield expansion and opening of new hospitals. "KPJ has experienced a breakout continuation pattern, with a consensus target price of RM2.98," it said in a note. At 9.19am, the most actively traded counters on Bursa Malaysia were Pharmaniaga down one sne to 17.5 sen, TWL flat at 2.5 sen and SNS Network down one sne to 51 sen.
The Star
5 days ago
- Business
- The Star
Optimistic growth prospects for Frontken
Maybank IB said the projected better 2H25 is consistent with historical seasonality. PETALING JAYA: Frontken Corp Bhd is on track to deliver stronger results in the second half of 2025 (2H25), underpinned by rising demand for advanced nodes, the commissioning of Plant 3's new capacity, and plans for a new eight-storey facility. Maybank Investment Bank Research (Maybank IB) said the projected better 2H25 is consistent with historical seasonality. The research house added management also disclosed that a fresh US merger and acquisition (M&A) opportunity is being explored, following the lapse of a prior acquisition deal. Frontken's 1H25 core profit came in above Maybank IB's expectations and in line with consensus, lifted slightly by better-than-expected margins. 'We continue to expect a stronger 2H25, supported by seasonal trends and new capacity ramp-up,' the research house said in a report yesterday. The group's 1H25 core profit, excluding RM18mil in one-offs which are primarily foreign exchange (forex) losses, rose by 39% year-on-year (y-o-y) to RM82mil, beating Maybank IB's expectations and meeting consensus at 51% of the research house's financial year 2025 (FY25) estimates and 48% of the street's. Revenue grew 5% y-o-y to RM289mil, led by stronger performance in Taiwan (up by 15% y-o-y), while Malaysia (down by 19%), Singapore (down by 17%), and the Philippines (down by 0.4%) saw declines. 'Earnings before interest and taxes (Ebit) margin fell 2.4 percentage points y-o-y to 31.6%, largely due to forex headwinds in Taiwan; however, stripping out forex impact, Ebit margin would have reached 38.2%, with core profit margin improving 6.9 percentage points y-o-y to 28.4%. 'The earnings beat was driven by improved margins on a more favourable product mix,' Maybank IB said. Maybank IB has raised its FY25 to FY27 earnings forecast by 2% to reflect stronger-than-expected margins. The research house maintained a 'buy' call on Frontken with a higher target price of RM5.19 from RM5.10 based on an unchanged 43 times FY26 price-to-earnings ratio. Further, Hong Leong Investment Bank (HLIB) Research said Frontken has delivered on the key catalysts outlined in its previous report, that is stronger-than-expected earnings and clear M&A plans for the warrant proceeds. 'We believe continued delivery on these fronts, backed by strong institutional interest, could absorb the incremental share overhang from warrant conversion and support a re-rating beyond the RM4 range,' the research house said. HLIB Research upgraded Frontken to a 'buy' from a 'hold' with a revised target price of RM4.95 based on a higher target price-to-earnings ratio of 37 times FY26 earnings per share (from 35 times, reflecting a better margin profile). The research house remains positive on Frontken's growth prospects, underpinned by structural semiconductor tailwinds from artificial intelligence-driven demand, ongoing migration to leading-edge nodes, and robust foundry capital expenditure spending. 'Its solid balance sheet (net cash of RM509mil or 32 sen per share) will help support expansion plans in Taiwan, Singapore and the United States,' HLIB Research said. Philip Capital said operationally, Frontken has completed preliminary qualification for a new customer in Singapore and is awaiting final approval, targeted for September 2025. To support rising demand, the group has added new production lines at its P1 and P2 facilities and plans to relocate less critical processes to the newly acquired P3 site, freeing up space for more complex and higher-value operations.
New Straits Times
5 days ago
- Business
- New Straits Times
HLIB raises Frontken's FY2025, FY2026 earnings on higher margin assumptions
KUALA LUMPUR: Hong Leong Investment Bank (HLIB) raised its financial year 2025 (FY 2025) and FY2026 earnings forecasts of Frontken Corporation Bhd by 16 per cent to 19 per cent, mainly to reflect higher margin assumptions. In a research note, HLIB said net margins of 28 per cent to 29 per cent are now expected, up from 23 to 25 per cent previously. The investment bank said Frontken reported a strong core net profit of RM52 million in the second quarter of 2025 (2Q 2025), a 73 per cent increase quarter-on-quarter and 61 per cent year-on-year, ahead of their expectations, but still within consensus. "The beat was driven by net margin expansion to 33 per cent in the 2Q 2025, from 23 per cent in 1Q 2025, underpinned by a more favourable product mix, operational efficiency gains, and operating leverage. "We believe continued delivery on these fronts, backed by strong institutional interest, could absorb the incremental share overhang from warrant conversion and support a re‐rating beyond the RM4.00 range," it said. HLIB said it has upgraded Frontken to a "buy" from "hold", with a revised target price of RM4.95. On prospects, the investment bank said it remained positive on Frontken's growth, underpinned by structural semiconductor tailwinds from artificial intelligence (AI)-driven demand, ongoing migration to leading-edge nodes, and robust foundry capex spending. HLIB said the company's solid balance sheet (net cash of RM509 million or 32 sen per share) will help support expansion plans in Taiwan, Singapore, and the United States.
The Star
7 days ago
- Business
- The Star
Frontken's 1H performance driven by robust AI demand
Phillip Capital Research has trimmed its earnings forecasts for Frontken for 2025 to 2027 by between 3% and 9%. KUALA LUMPUR: Frontken Corp Bhd 's long-term growth trajectory remains supported by artificial intelligence (AI) adoption and other transformative technologies that are expected to drive demand for advanced semiconductor components and high-value services. In the commentary accompanying its second-quarter results filing with Bursa Malaysia, the group said its semiconductor business in the first half of 2025 (1HFY25) was supported by strong demand from its customers, mainly from continued robust AI and high-performance computing (HPC) related demand. "Looking ahead, the group remains encouraged about the positive prospects shared by our key customers and we are actively exploring how to better support our customers including increasing our capacities," it said. The group said it does not anticipate sharp growth in its oil and gas segment, but is cautiously optimistic that order volume will pick up in the second half of 2025. In 2QFY25, Frontken recorded a net profit of RM33.49mil, which was slightly higher than RM33.33mil in the year-ago quarter. Earnings per share in 2QFY25 was 2.11 sen compared to 2.12 sen in the comparative quarter. The group reported revenue of RM156.43mil during the quarter, against RM134.93mil in 2QFY24. The board of directors declared a dividend of two sen per share, with entitlement and payment dates to be announced at a later date. For the six-month period, Frontken's net profit rose slightly to RM64.56mil from RM63.39mil in the year-ago period, while revenue gained to RM288.99mil in 1HFY25 from RM275.44mil in 1HFY24.
The Star
30-07-2025
- Business
- The Star
Frontken expected to report solid 2Q results
HLIB Research said favourable foreign-exchange trends and sustained strong demand from its key Taiwanese clients will drive the company's growth. PETALING JAYA: Frontken Corp Bhd , a provider of support services to the semiconductor industry, is expected to record a strong financial performance in its second quarter of 2025 (2Q25) on strong tailwinds from macro factors, analysts say. Favourable foreign-exchange trends and sustained strong demand from its key Taiwanese clients will drive its growth, said Hong Leong Investment Bank Research (HLIB Research). Frontken stands to benefit from the surge in new semiconductor fabs globally, notably in the United States, Singapore and India, while the weaker ringgit against the Taiwanese dollar works in its favour, the research house said. The Taiwanese dollar appreciated against the ringgit by 4% in 2Q25 from the previous consecutive quarter. But a dilution in the company's share base is expected to cap share prices for the time being. 'While we remain positive on Frontken's growth prospects, a potential sizeable increase in share count of an additional 32% from a warrant conversion that expires in May 2026 remains an overhang that could limit upside in the near term,' the research house said. 'With Frontken's share price now above the RM4 warrant exercise price, the 510 million in-the-money warrants (32% of the current share base) could present a near-term overhang. 'Sustained re-rating beyond the current price range would require strong catalysts such as unexpected strong earnings delivery, clear expansion plans or entry into new markets to absorb incremental supply,' the research house added. HLIB Research also said Frontken is holding some US$30mil in cash that was previously intended for a potential US acquisition, which could result in up to some RM10mil in non-core, unrealised forex losses in 2Q25. The weaker ringgit bodes well for Frontken's key subsidiary, Ares Green Tech Corp, which primarily bills its customers in the Taiwanese dollar, the research house said. 'This contrasts with other listed Malaysian peers in the technology sector that are affected by the stronger ringgit due to their US dollar-based export sales,' it said. HLIB Research said although the planned US acquisition did not materialise, the country's market remains on Frontken's radar, with management currently exploring a potential joint venture or collaboration with a US-based precision cleaning company to support Taiwan Semiconductor Manufacturing Co Ltd's newly established fabs. 'In the near term, cleaning services are still handled in Taiwan via air freight, which remains cost-effective relative to the high operating costs in the United States. However, this arrangement is unlikely to be sustainable, as it runs counter to US localisation and self-sufficiency objectives.' HLIB Research left its forecasts for Frontken unchanged, maintaining its 'hold' call with an unchanged target price of RM4, based on a target price-earnings ratio of 35 times earnings for next year.
