Pentamaster International (1665.HK), mcap=hkd 1.9bn, price hkd 0.79 vs 0.90

$1665.HK pitch:
– Pentamaster International – provider of automated testing equipment and factory automation solutions.
– Trades at only 9x earnings.
– Fast-growing business at a heavily discounted price, with high returns on capital, significant tailwinds, diversified revenue streams and run by conservative management who has built up a significant net cash balance across the years.
– The company is 64% owned by Malaysia’s listed parent, which is a stock market darling and trades at 39x PE.
– Wide valuation discrepancy despite Pentamaster International contributing more than 100% of the parent’s earnings.

$1665.HK valuation:
– At 9x earnings with net cash on the balance sheet trades at a large discount to its parents and its peers.
– Local pers in Malaysia are at 18x-37x PE, whereas global players like $TER, Advantest, Chroma, and Cohu are at 15x-20x earnings.

Exp. gain: Not specified.

Full 1665.HK write-up (free guest account required):

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