“While the semiconductor segment is on an uptrend, other segments should deliver a steady performance. With its diverse exposure to multiple market segments and sound financial position, the group is in a good position to continue riding on the recovery path ahead,” says Ling.
The company operates via two main divisions. Through its mechatronics division, which generates around 90% its total revenue, it makes parts and products for customers in the semiconductor, medical, analytical life sciences and industrial automation industries. Its other division, advanced plastics solutions, serves customers in the automotive, consumer & industrial and electronics industries.
While Frencken generates revenue from various customers across different industries, its semiconductor segment revenue attracts the most interest, accounting for half of its FY2025 revenue.
In the most recent 2HFY2025, semiconductor revenue increased by just 1.1% to $210.9 million. However, for the full year, the jump was 16.7% to $426.6 million. In FY2025, Frencken’s revenue from industrial automation customers rose by a larger 48.6% y-o-y, but at $43.1 million, it remains a much lower absolute figure than semiconductor revenue.
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For the whole of FY2025, Frencken recorded earnings of $37.1 million, an increase of 5.4% over FY2024; total revenue was up 8.9% to $865.1 million, bringing the topline closer to the $1 billion milestone.
As guided by Frencken, it expects revenue for its current 1FH2Y2026 to remain “largely unchanged” relative to 1HFY2025. Yet, it expects profit to grow, driven mainly by its mechatronics operations in Asia, which would cushion against the short-term softness of the analytical life sciences and semiconductor businesses in Europe, and higher organisational costs in 1HFY2026.
Ling believes that Frencken’s outlook remains positive, with continued earnings progression expected into FY2026, driven by recovering semiconductor volumes, a richer product mix and sustained productivity gains.
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Citing the management, she notes that Frencken’s order flow from a key semiconductor customer is expected to strengthen from 2HFY2026 as its inventory correction cycle concludes. Further pick up is seen in the medium term. “For newer, more advanced products, customers are currently undergoing process qualification following initial deliveries, suggesting that meaningful new orders are more likely to materialise in 2027–2028,” says Ling.
This view is shared by Jarick Seet of Maybank Securities, who sees Frencken as a key beneficiary of the semiconductor industry’s recovery. He says Frencken’s key European semiconductor customer is likely to face some weakness in 1HFY2026 due to inventory drawdowns, but the shortfall will be offset by the Asia customer ramping up.
While both these key customers are expected to ramp up together in 4QFY2026, Seet expects a clearer picture to emerge after Frencken provides its 1QFY2026 business update. For now, Seet has raised his FY2026 patmi forecast by 10.2% and FY2027 by 9.4%, respectively. In addition, Seet has applied valuation multiples of 18 times FY2026 earnings to 25 times, leading to his higher target price of $2.63, up from just $1.72 previously.
Similarly, Yik Ban Chong of PhillipCapital expects semiconductor-related orders to pick up gradually in the second half of this year. This view is premised on the 32% y-o-y increase in 2026 capex guided by Taiwan Semiconductor Manufacuting Co, a key customer of Frencken’s own key European customer, says Chong, who has raised his target price from $1.87 to $2.50, which is based on a higher valuation multiple of 24x FY2026 earnings, up from 18x previously, to be in line with the one-year forward PE fetched on average by Frencken’s peers.
On the other hand, William Tng of CGS International has raised his target price from $1.72 to $2.09. However, with Frencken’s share price already exceeding his previous target price and now closer to the revised target price range, Tng’s call for this counter is to downgrade from “add” to “hold” to reflect his view that the 2HFY2026 recovery has been priced in.
While sharing views that semiconductor demand is poised to grow, Tng warns that Frencken will likely incur one-off costs that will distort the upcoming bottom lines. For one, Frencken, which is the product of a series of mergers of different companies serving different industries operating across different markets, is now in the midst of a multi-phase plan to reorganise and integrate to build a more efficient structure to support its future growth. One key plank is to implement system upgrades company-wide. Frencken will also incur restructuring costs for its automotive business as its plants in Sungai Buloh and Johor are consolidated, adds Tng.
