KUALA LUMPUR (Nov 5): Frontken Corp Bhd emerged as one of the top gainers in the local bourse on Friday (Nov 5) after the group registered a 27.94% hike in its net profit to RM27.3 million in the third quarter ended Sept 30, 2021 (3QFY21).
The stock opened five sen or 1.31% higher at RM3.87 and rose further to reach an intra-morning high of RM3.94.
At 10.30am on Friday, the stock was trading at 11 sen or 2.88% higher at RM3.93, giving it a market value of RM6.21 billion.
It saw 2.16 million shares changing hands.
Since the beginning of the year, the stock has surged by 60.49% from RM2.43 reported on Jan 4, 2021.
According to the group, its 3Q net profit jumped by almost a third from RM21.34 million last year, thanks to the higher revenues of its semiconductor and oil and gas (O&G) businesses.
The company said its quarterly revenue also increased by 23% to RM116.59 million from RM94.79 million, mainly underpinned by significant contributions from its subsidiaries in Taiwan and Malaysia.
“The improvement in our local business was largely due to new orders for provision of manpower supply and mechanical rotating equipment services from various contracts that the group has with the Petronas group of companies.
“Our subsidiary in Singapore recorded a slightly lower revenue compared to the preceding year corresponding quarter caused mainly by shortage in workforce and delay in our customers’ orders attributable to Covid-19 safety measures implemented by the government of Singapore,” said Frontken in the bourse filing.
For the nine months ended Sept 30, 2020 (9MFY21), the group’s net profit grew 27.74% to RM74.96 million against RM58.68 million, while revenue rose 22.99% to RM328.73 million from RM267.28 million a year ago.
On a quarter-on-quarter basis, Frontken registered a 10.37% increase in net profit from RM24.74 million in 2QFY21. Revenue in 3QFY21 was up by 7.33% compared with RM108.63 million in the immediate preceding quarter.
HLIB reiterates “buy” call on Frontken, raises TP to RM4.15
Meanwhile, Hong Leong Investment Bank (HLIB) has reiterated its “buy” call on Frontken and raised its target price (TP) to RM4.15 from RM3.88 previously on the back of sustainable global semiconductor market outlook and the group’s strong balance sheet to support its Taiwan expansion.
The research house highlighted the group currently has a net cash position of RM282 million or 18 sen per share.
“Top and bottom line growths were mainly driven by semiconductor business though O&G business has seen robust improvement.
“Ares Green Technology Corp (AGTC) has completed the acquisition of a building (Plant 2) situated in the Southern Taiwan Science Park at Kaohsiung City on July 9, 2021 to support a major customer’s aggressive expansion. It is expected to be commissioned sometime in the second half of next year (2H22).
“We like its (Frontken) unique exposure to the leading-edge semiconductor frontend supply chain,” HLIB said in a research note on Friday.
According to the group’s website, Frontken and its subsidiaries are engaged in providing surface and mechanical engineering solutions, serving a wide range of heavy industries such as O&G, power generation, semiconductor, and marine.
It also provides various specialized engineering services, such as thermal spray coating, cold build up coating, plating and conversion coating, specialized welding, precision cleaning, abrasive blasting, machining and grinding.