Wentel Engineering Holdings Berhad - Solid showing in 3Q25
Wed, 26-Nov-2025 07:46 am
by Brian Chin Haoyan • Apex Research

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WENTEL (0298)

Target Price (RM)

0.50

Recommendation

Buy

  • Wentel posted 3Q25 core net profit of RM6.4m (+4% QoQ, +12% YoY), bringing 9M25’s sum to RM18.8m (+29% YoY). The results were in line with our FY25F estimates at 77% of our forecasts.

  • Revenue grew 10% QoQ, driven by higher contribution from fabrication of semi-finished metal products (revenue +21% QoQ; buoyed by security screening equipment). However, core earnings rose at a slower clip (+3.6% QoQ) due to higher revenue mix of security screening segment, which typically carries lower gross margins relative to fabrication of metal parts (mainly for E&E).

  • Maintain our forecasts and BUY call with unchanged TP of RM0.50, based on a 20x PE multiple applied to FY26F EPS of 2.5 sen.

 

Results inline. Wentel posted 3Q25 core net profit of RM6.4m (+4% QoQ, +12% YoY), bringing 9M25’s sum to RM18.8m (+29% YoY). The results were in line with our FY25F estimates at 77% of our forecasts. 3Q25 results were arrived after excluding net forex loss of RM0.25m.

 

QoQ. Revenue grew 10% primarily driven by higher contribution from fabrication of semi-finished metal products (revenue +21%; buoyed by security screening equipment). However, core earnings rose at a slower clip (+3.6%) due to higher revenue mix of security screening segment, which typically carries lower gross margins relative to fabrication of metal parts (mainly for E&E).

 

YoY. Core earnings rose 12%, underpinned by a 48% jump in revenue from the fabrication of semi-finished products due to stronger demand from key security-screening customers amid heightened trade tensions and national-security concerns. This was partly offset by a 10% decline in revenue in the fabrication of metal parts segment due to a temporary order slowdown from E&E customers.

 

YTD. Core net profit jumped 29%, boosted by better revenue contribution in both fabrication of semi-finished metal products (+26%; aforementioned reason in YoY paragraph) and metal parts (+28%; improved demand for both front- and back-end semiconductor equipment). 

 

Outlook. Wentel’s performance should remain resilient in the coming quarter, with earnings likely skewed to the upside versus 3Q25, on the back of guided resilient demand for security screening equipment and pick-up in the E&E segment from both front- and back-end semiconductor equipment customers. Meanwhile, its new plant (Lot 815), set to be operational in 1H26 and doubling its operational floor space to 334k sqft, should unlock additional capacity for Wentel to meet increasing orders and support new product innovations (NPIs) for its key security-screening system and E&E customers in FY26 and beyond.

 

Earnings Revision. Unchanged, as results were inline.

 

Valuation. Maintain BUY call with an unchanged TP of RM0.50, based on a 20x PE multiple applied to FY26F EPS of 2.5 sen. We like Wentel for its (i) favourable earnings growth trajectory (3-year CAGR of 19% over FY25-27F), (ii) deepening exposure to the higher margin E&E segment and (iii) undemanding valuation of c.12x FY26F PE.

 

Risks. Key downside risks include high forex exposure, tariff risks and geopolitical uncertainties as well as customer concentration risk.

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