Frencken is expected to release its final year results on the evening of Feb 27. Seet expects 4QFY2023 to show gradual q-o-q improvement with FY2023 revenue expected to come in at $723 million and net profit after tax (NPAT) to be at $25 million.
“However, it’s key customer Applied Materials (AMAT) just reported a stellar 1QFY2024 result and lifted its 2QFY2024 earnings outlook. We now believe AMAT’s inventory levels will be drawn down, raising the probability of more orders for Frencken,” says Seet. AMAT contributes 30-35% of Frencken’s whole semi-conductor segment.
Meanwhile, another key customer in Europe is also trying to move some production to Malaysia, which Seet believes will further benefit Frencken which is assisting in the move.
The automotive segment is also expected to pick up strongly in the next few years with new product innovations (NPI) in the electric vehicle (EV) space. Frencken’s utilisation has been around 50-55% for its SEA factories in 2023 and the analyst expects this to rise to 60-65% in FY2024 on increased auto and semi-con segment demand.
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Seet also views winning awards as good for future business. “We believe that Frencken is in a positive place as a supplier for AMAT as subsidiary ETLA is one of the 12 suppliers globally that won AMAT’s best in class performance award for 2023. We believe this shows the good working relationship they have as well as being a testament to the quality and consistency of Frencken’s capabilities,” he says.
Shares in Frencken gained 3.45% at 9.40am on Feb 20 to trade at $1.50.
