Latest news with #FrontkenCorpBhd
The Star
06-08-2025
- 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.
The Star
05-08-2025
- 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.
New Straits Times
30-07-2025
- Business
- New Straits Times
Frontken set for strong Q2 on forex gains, steady demand from Taiwan: HLIB
KUALA LUMPUR: Frontken Corp Bhd is expected to deliver a robust underlying second quarter (Q2) 2025 performance driven by favourable forex trends and sustained strong demand from its key Taiwanese clients, said Hong Leong Investment Bank Bhd (HLIB). HLIB noted that currency is less of a drag now, as the Taiwan Dollar has appreciated against the Ringgit by four per cent quarter on quarter (QoQ) in Q2 2025. It said this bodes well for Frontken's key subsidiary, Ares Green Tech Corp (AGTC), which primarily bills its customers in Taiwan dollars. "This contrasts with other listed Malaysian peers in the technology sector, who are affected by the stronger ringgit due to their US dollar-based export sales. "Having said that, we understand that Frontken is holding approximately US$30 million in cash (previously intended for a potential US acquisition), which could result in up to RM10 million of non-core, unrealised forex losses in Q2 2025," it said. Looking ahead, HLIB remains optimistic about Frontken's prospects, citing tailwinds from the global expansion of semiconductor fabrication plants, particularly in the US, Singapore, and India. Despite the strong outlook, the research house cautioned that a potential 32 per cent increase in share base from warrant conversion (due May 2026) could weigh on the stock's near-term upside. HLIB is keeping a Hold stance on Frontken with an unchanged target price of RM4.00. "We remain positive on Frontken's growth prospects, underpinned by structural semiconductor tailwinds from AI-driven demand, ongoing migration to leading-edge nodes, and robust foundry capex spending," it added.
New Straits Times
12-06-2025
- Business
- New Straits Times
One in five votes against Frontken's share mandate
KUALA LUMPUR: More than one in five of Frontken Corp Bhd's voting shares were cast against granting the board authority to issue new shares at its annual general meeting (AGM) on Thursday, reflecting unease over potential equity dilution. In a filing with Bursa Malaysia, the company said it received 78.8 per cent support for the mandate, which allows the board to issue up to 10 per cent of its issued capital without prior shareholder approval until the next AGM. The 21.2 per cent dissent, amounting to over 233.9 million shares, was the highest level of opposition among the six resolutions tabled. According to an earlier AGM notice, Frontken viewed the mandate as a tool to respond swiftly to funding needs for working capital or potential investments. However, it clarified that no share issuance was currently planned. "At this juncture, there is no decision to issue any additional share. If there should be a decision to issue any new share after the general mandate is sought, the company will make an announcement," the notice stated. The proposal to renew the company's authority to buy back up to 10 per cent of its own shares also passed, with 86.7 per cent voting in favour and 13.3 per cent against, a narrower margin compared to other resolutions. The RM50 million buy-back mandate will be funded through retained profits or borrowings. As of end-2024, Frontken had RM33.7 million in retained earnings, according to its share buy-back statement. The company repurchased just over 1.1 million shares from the open market in March, bringing its total treasury shares to over 8.3 million. The buy-back was positioned as a tool for managing capital, stabilising the share price and rewarding shareholders. Meanwhile, two other resolutions saw modest but notable pushback, with nearly five per cent voting against both the proposed directors' fees and benefits of up to RM600,000, and the re-election of Ng Chee Whye as a board member. The reappointment of the company's auditors was backed by 99.1 per cent of voting shares, while the re-election of Koh Huey Min saw similarly strong support, with nearly 99 per cent in favour. Frontken specialises in surface engineering and precision cleaning for the semiconductor, oil and gas, power, petrochemical and marine industries. As at 3.19pm, Frontken's shares rose 0.77 per cent or three sen to RM3.95, with 882,800 units traded. This valued the company at RM6.03 billion. Year-to-date, the stock has fallen 10.86 per cent.
