Wentel Engineering Holdings Berhad - Closing FY25 with a bang
Mon, 16-Feb-2026 08:28 am
by Brian Chin Haoyan • Apex Research

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WENTEL (0298)

Target Price (RM)

0.48

Recommendation

Buy

 

  • Wentel posted a record high quarterly core earnings of RM6.9m (+7% QoQ, +22% YoY), bringing FY25’s sum to RM25.7m (+27% YoY). The results came in slightly above our FY25 estimates at 106% due to lower-than-expected ETR. 

  • Order flows from its security screening and E&E customers to remain stable in 1H26. Wentel’s FY26 earnings growth is skewed toward 2H26 in view of an anticipated rebound in front-end WFE sales. The new Lot 815 plant should provide incremental capacity to meet rising orders. 

  • Trim our forecasts FY26/27F earnings by 3%/2% on lower USDMYR assumptions (4.03/4.00) but partly offset by a lower FY26/27F ETR of 22% (from 24%) on tax incentives arising from its new plant investment. Maintain BUY with a slightly lower TP of RM0.48 (from RM0.50). 

 

Slight beat. Wentel registered record high quarterly core earnings of RM6.9m (+7% QoQ, +22% YoY), bringing FY25’s sum to RM25.7m (+27% YoY). The results came in slightly above our FY25 estimates at 106% due to lower-than-expected effective tax rate. 4QFY25 results were arrived after excluding net EIs of RM2.7m, comprising forex loss (RM2.6m), impairment loss on receivables (RM0.2m) and gain on disposal of PPE (-RM0.1m).

 

QoQ. Despite broadly flattish revenue as gain from metal parts fabrication (+7%; improving order flows from E&E customers) offset by slightly weaker semi-finished metal products (-3%; weaker USD versus MYR), core net profit was up 7% thanks to lower tax expenses (-82%; overprovision of deferred tax in the previous FY).

 

YoY/YTD. Core earnings rose 22% YoY/27% YTD, mainly attributed to increased demand from key security-screening customers amid heightened trade tensions and national security concerns. Also, the effective tax rate for FY25 (20.5%; overprovision of deferred tax in FY24) is meaningfully lower than FY24 (27.8%; higher non-deductible expenses such as listing fees). 

 

Outlook. We expect Wentel’s order flows from its major security screening equipment customers and semiconductor equipment manufacturers (E&E) to remain broadly stable in 1H26, in line with guidance from key WFE players, which have flagged flattish front-end demand amid inventory digestion in China, tighter export controls and “cleanroom constraints”. We expect Wentel’s FY26 earnings growth to skew toward 2H26 in view of a rebound in front-end WFE sales led by the memory supercycle and robust capex outlook from leading foundries. Meanwhile, the new Lot 815 plant should provide incremental capacity to support rising orders. Nonetheless, the recent appreciation of MYR against the greenback may dampen its earnings growth, though there is upside risk to our ETR assumptions arising from tax incentives tied to the new plant investment.

 

Earnings Revision. We trim our FY26/27F earnings by 3%/2% on weaker RM-translated revenue and margins from lowered USDMYR assumptions (4.03/4.00), but is partly offset by a lower FY26/27F ETR of 22% (from 24%) on tax incentives arising from its new plant investment.

 

Valuation. Maintain BUY call with slightly lower TP of RM0.48 (from RM0.50), based on a 20x PE multiple applied to FY26F EPS of 2.4 sen. We like Wentel for its (i) deepening exposure to the higher-margin E&E segment, (ii) undemanding valuation of ~10x FY26F PE on a healthy FY25–27F earnings CAGR of c.14%, and (iii) ample rerating potential as the Group delivers earnings growth and demonstrates successful scaling of its E&E segment.

 

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

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