Frencken - DBS Research 2025-02-28: Semiconductor Takes The Lead In 1H25

• Frencken reported FY24 revenue of S$794.3m, up 6.9% y-o-y. The semiconductor segment, which accounts for 46% of total revenue, jumped 29.4% y-o-y to S$365.5m. This was driven by increased orders from a key customer in Europe and continued recovery in sales from the Asia operations.
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Revenue growth fuels higher margins.

• Gross profit margin for FY24 improved to 14.5% from 13.2% in FY23, due mainly to better operating leverage as revenue increases. Net margin increased to 4.7% vs 4.4% in the previous year.
• FY24 net profit rose 14.3% increase to S$37.1m. Overall, both Frencken's FY24 revenue and net profit met expectations.
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Semiconductor growth to continue.

• Frencken expects sequential revenue improvement in its European semiconductor business in 1H25, despite the industry downturn. Asian semiconductor revenue is also projected to rise due to increased demand and wallet share expansion with key customers in the front-end equipment space.
• Frencken’s positive view on the semiconductor divisions aligns with the broader industry. Semiconductor revenue is projected to register 12.7% y-o-y growth in 2025, followed by another 8.9% in 2026, after an 18.1% gain in 2024, according to Gartner.
• The wafer fab equipment space, where Frencken is predominantly in, is also expected to register decent y-o-y growth of 4% to 7% in the next 1-2 years.

Expect stable performance for other divisions.

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Lee Keng LING DBS Group Research | https://www.dbs.com/insightsdirect/ 2025-02-28 SGinvestors.io

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