IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pentamaster-corp-bhd" target="_blank" data-smartkarma-citation="entities:15302:1" rel="noopener">Pentamaster Corp (PENT MK)</a> specialises in the manufacturing of automated testing equipment (ATE segment) and the provision of factory automated solutions (FAS segment). </li>
<li>Pentamaster's solid track record, exposure to structural trends (electric vehicles), profitability, cash generation and healthy balance sheet are attractive. The shares are up 12.9% YTD.</li>
<li>However, the shares reflect this story and the valuation looks full compared to peers and historical multiples. We like the fundamentals and would be buyers of any prolonged weakness.</li>
</ul>



Pentamaster Corp (PENT MK) specialises in the manufacturing of automated testing equipment (ATE segment) and the provision of factory automated solutions (FAS segment). 
Pentamaster's solid track record, exposure to structural trends (electric vehicles), profitability, cash generation and healthy balance sheet are attractive. The shares are up 12.9% YTD.
However, the shares reflect this story and the valuation looks full compared to peers and historical multiples. We like the fundamentals and would be buyers of any prolonged weakness.


Pentamaster Corp (PENT MK): Good Story, at What Price?

Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

Pentamaster International / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/pentamaster-international-ltd" target="_blank" data-smartkarma-citation="entities:31099:1" rel="noopener">Pentamaster International (1665 HK)</a> is a Malaysian company spun-out of Pentamaster Corporation and listed in Hong Kong in January 2018. It sells automated test equipment and factory automation solutions.Due to the adoption of 3D sensors within smartphones, it is seeing a strong increase in sales with its revenue growing by 45% per annum from 2014 to 2019. 3D sensing is at the early adoption stage and should grow rapidly over the next five years. Pentamaster has a strong relationship with its customers, creating customized products with customers often more than one year ahead of the final sale. The company continues to expand its product offering to diversify across sectors and throughout the value chain.Pentamaster has a healthy financial position with net cash equal position. It is also very profitable with a five-year average return on invested capital of 65.7%. Due to minimal investment requirements, ROIC increased from 16% in 2015 to 132% in 2019. There are no corporate governance concerns.Despite Pentamaster’s quality and growth, there is 98% upside to base-case 2025 fair value per share of HKD3.33. The pandemic has caused production and installation delays causing the sales in the first nine months to fall by 15%. The company believes its long-term growth outlook is only temporarily impacted by the pandemic.The combination of growth and valuation makes Pentamaster International an attractive investment opportunity. Pentamaster International is preferred over <a href="https://www.smartkarma.com/entities/pentamaster-corp-bhd" target="_blank" data-smartkarma-citation="entities:15302:1" rel="noopener">Pentamaster Corp (PENT MK)</a> due to its valuation. Pentamaster International trades at 13 times 2019 earnings, while Pentamaster Corporation trades at 42 times 2019 earnings. Because of its recent listing, Pentamaster International is not as well known by investors in Hong Kong. There is also the cross-border listing, which typically leads to a discount.

Pentamaster International (1665 HK) is a Malaysian company spun-out of Pentamaster Corporation and listed in Hong Kong in January 2018. It sells automated test equipment and factory automation solutions.Due to the adoption of 3D sensors within smartphones, it is seeing a strong increase in sales with its revenue growing by 45% per annum from 2014 to 2019. 3D sensing is at the early adoption stage and should grow rapidly over the next five years. Pentamaster has a strong relationship with its customers, creating customized products with customers often more than one year ahead of the final sale. The company continues to expand its product offering to diversify across sectors and throughout the value chain.Pentamaster has a healthy financial position with net cash equal position. It is also very profitable with a five-year average return on invested capital of 65.7%. Due to minimal investment requirements, ROIC increased from 16% in 2015 to 132% in 2019. There are no corporate governance concerns.Despite Pentamaster’s quality and growth, there is 98% upside to base-case 2025 fair value per share of HKD3.33. The pandemic has caused production and installation delays causing the sales in the first nine months to fall by 15%. The company believes its long-term growth outlook is only temporarily impacted by the pandemic.The combination of growth and valuation makes Pentamaster International an attractive investment opportunity. Pentamaster International is preferred over Pentamaster Corp (PENT MK) due to its valuation. Pentamaster International trades at 13 times 2019 earnings, while Pentamaster Corporation trades at 42 times 2019 earnings. Because of its recent listing, Pentamaster International is not as well known by investors in Hong Kong. There is also the cross-border listing, which typically leads to a discount.

Pentamaster International (1665:HK): An Undervalued Beneficiary of Long Term Growth Trends

Malaysia

Pentamaster International provides automation manufacturing and technology solutions, including automated test equipment and factory automation solutions, to multinational manufacturers. The company also designs and manufactures single-use medical devices and medical equipment for various industries such as semiconductor, automotive, and medical devices. Pentamaster International was founded in 1991 and is headquartered in Penang, Malaysia.

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Pentamaster International (1665 HK)

Pentamaster Corp (PENT MK): Good Story, at What Price?

The shares have had a strong run and the valuation looks full compared to peers and historical multiples. We like the fundamentals and would be...

Arun George

Pentamaster International (1665:HK): An Undervalued Beneficiary of Long Term Growth Trends

Despite trading at a PE of 13, Pentamaster International is a beneficiary of the 3D sensor market. It parent and near-identical asset, Pentamaster...

Reperio Capital

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