Frontken registered 4Q25 core net profit of RM39.4m (-2% QoQ, +9% YoY), bringing its FY25’s sum to RM166.0m (+27% YoY) – slightly below our (94%) but within consensus (96%) expectations.
In tandem with the 3% decline in revenue, core net profit shrunk marginally (-2%) as lower average TWD/MYR at RM0.1338 in 4Q25 (3Q25: 0.1412) dragged Taiwan’s operating profit (-5%). Results were further weighed by weaker profit contribution from Malaysia (-74%) and Singapore (-2.4%) due to weaker O&G activities and slower-than-expected semicon ramp.
Upon trimming our FY26/27F earnings forecasts by 8%/11% and factoring in the enlarged share base of 1.66bn shares, we maintain our BUY call with a lower TP of RM4.60 (from RM5.18), based on an unchanged PE multiple of 38x applied to FY26F core EPS of 12.1 sen.
Broadly inline. Frontken registered 4Q25 core net profit of RM39.4m (-2% QoQ, +9% YoY), bringing its FY25’s sum to RM166.0m (+27% YoY) – slightly below our (94%) but within consensus (96%) expectations. The negative deviation stemmed from lower-than-expected contribution from Taiwan (forex woes) and Malaysia (oil and gas slowdown). 4Q25 core net profit was arrived after deducting forex gain (RM3.6m), fair value gain on short-term investments (RM1.3m) and withholding tax adjustment (-RM0.5m).
QoQ. In tandem with the 3% decline in revenue, core net profit eased marginally (-2%) as lower average TWD/MYR at RM0.1338 during the quarter (3Q25: 0.1412) dragged Taiwan’s operating profit (-5%). Results were further weighed by weaker profit contribution from Malaysia (-74%) and Singapore (-2.4%) due to weaker O&G activities and slower-than-expected semicon ramp.
YoY/YTD. Core earnings rose +9% YoY and +27% YTD, driven by stronger revenue contribution from Taiwan (+20% YoY / +17% YTD) and net margin expansion of 100bps YoY / 430bps YTD. The improvement was supported by robust demand and a more favourable product mix (increasing mix of advanced node cleaning services) from its key foundry customer amid surging AI accelerator orders. However, gains were partially offset by the stronger MYR against the TWD.
Outlook. Management remains positive on the growth outlook of AGTC in FY26, supported by the production ramp of advanced 2nm nodes by its key customer. This is expected to drive a more favourable product mix and better operating leverage through 2026, following the installation of cleaning lines for new specialised tools in P2 and additional advanced cleaning lines in P1 to meet the surging demand. In addition to the incremental volume, we understand that AGTC has successfully negotiated better pricing, which should help cushion forex headwinds arising from the continued appreciation of MYR against TWD (averaging c.RM0.1260/TWD YTD). Meanwhile, contribution from Singapore is set to improve as its new semiconductor customer gradually ramps up capacity in 2H26, while Malaysia operations are expected to recover on the back of improved Oil & Gas activities and price revisions. Overall, we expect the group’s revenue and bottom line to hit yet another record high in FY26, driven by higher capacity and ASP escalation (through handling more complex and critical components). Separately, M&A opportunities to penetrate in the US market remain under active negotiation.
Forecasts Revision. We trim our FY26/27F earnings forecasts by 8%/11% to reflect a lower TWD/MYR heading into FY26 and more conservative margin expectations for Malaysia and Singapore operations.
Valuation. Post-earnings revisions and after factoring in the enlarged share base of 1.66bn arising from warrant conversion, we maintain BUY rating but with a lower TP of RM4.60, based on an unchanged PE multiple of 38x on FY26F core EPS of 12.1 sen. Our ascribed PE multiple represents +0.5SD above Frontken’s 5-year historical average PE of 35x.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.879490 | 3.910828 |
| EUR | 4.586505 | 4.596176 |
| CNY | 0.565924 | 0.567111 |
| HKD | 0.495908 | 0.499928 |
| SGD | 3.062969 | 3.087829 |