Penjakoda [1665.HK] is a Malaysia-based company spun off from Pentamaster Corporation Berhad (PENT.MK). Benjakoda is mainly engaged in automation technology and solutions in the fields of semiconductors, telecommunications, automobiles, and consumer electronics. The company currently has more than 270 in-house engineers and has acquired a plot of land in Malaysia to expand production capacity. The company's products can be divided into two categories: a) automation equipment, such as microelectromechanical systems (MEMS) and intelligent sensor detection processor solutions; b) automated manufacturing solutions (AMS), such as AMS modules and intelligent automated robot manufacturing system solutions. The company was listed on the Stock Exchange on January 19, 2018. The company's IPO involved the issuance of 192 million new shares and raised HK$192 million at a tender price of HK$1. We believe the company will be another option for investors interested in investment topics such as semiconductor equipment, production automation, and adoption of new optical technology. Given the increasing news about the company, we think investors will choose this share after learning more about Penjacoda's business model and prospects. Investor Luncheon Summary: Penjacoda management held a luncheon with our clients yesterday. Management remains optimistic about the company's outlook for 2018, mainly due to the company's receipt of: a) orders from the telecommunications industry (relating to 3D sensing); and b) orders from the automotive industry. The company's management also agreed that despite the slowdown in total mobile phone shipments, the wider application of 3D sensors will drive the company's business growth. ams raised capital expenditure budgets and Finisar raised guidelines for 3D sensing products, which also supports our views on 3D sensing suppliers. The company has also received a number of orders from the automotive industry. Management said the company has benefited from the development of new energy vehicles and the wide application of electronic components in traditional vehicles. Compared with 2017, the contribution of the automotive industry is expected to increase significantly in 2018. The entry barrier to the automotive industry is high because it takes 2-4 years to obtain customer certification. Meanwhile, Penjacoda has already passed the certification and obtained the order. In the long run, the company believes that the medical industry will become another driving force for the company's growth. Management believes there is still room for growth in gross margin, as new products in the automotive and medical industries have higher profit margins. The company's current orders have further increased from RM292 million on December 31, 2017, reflecting strong orders in January-February 2018. As for the issue of customer concentration, the company's management pointed out that the company's main customers come from different market segments, which helps the company reduce risk through customer and product diversification. One of Penjacoda's main strengths is its R&D capabilities and interaction with customers in the early stages of product development. Business Overview: The company mainly provides automation technology and solutions, with customers all over Asia Pacific, North America and Europe. There are two main categories of the company's products: a) automated equipment; b) automated manufacturing solutions. Automation equipment is the company's main source of revenue, accounting for 86% of the company's total revenue for the full year of 2017. The company's products and services include: (i) semiconductor electronic component inspection services; and (ii) terminal product testing for consumer electronics, telecommunications products and LEDs. The company's Automated Manufacturing Solutions segment provides customized services for telecommunications, consumer electronics, food and beverage, and medical devices. In this division, the company mainly provides two products: 1) AMS modules; 2) intelligent automated robot manufacturing system solutions. The AMS module includes MES, assembly and inspection modules, high-speed sorters, and material handling equipment. The company launched an intelligent automated robot manufacturing system solution in 2016, which is a comprehensive automated manufacturing system combining various AMS modules (depending on the situation). Financial summary: The company's turnover in 2017 was RM271.6 million, up 91.5% year-on-year from RM141.8 million in 2016. The adjusted profit for the 2017 group was MYR 46.7 million, up 38.0% year over year from RM33.8 million in 2016. The company is in net cash position. The cash and bank deposit at the end of 2017 was RM81.6 million (excluding IPO proceeds in January 2018), up from RM26.3 million at the end of 2016. Our view: Although the company's business is relatively small, the company still deserves attention because it is involved in the following market segments that are receiving market attention: a) semiconductor equipment; b) production automation; c) optical technology; and d) automotive electronics. We still believe that the company will benefit as the new technology becomes more widely used. Compared to major peers such as ASM Pacific [0522.HK] and K&S (note that Ben Jacoda is not really in the same segment as ASM Pacific and K & S), Ben Jacoda's valuation is not cheap, but we believe investors are willing to give premium prices to companies with unique market positions. Based on our understanding, semiconductor test equipment manufacturers such as JinceElectronic have higher valuations. For mainland investors, Penjacoda may be quite attractive, although its market capitalization is very small at this stage. The company will announce its results for the first quarter of 2018 in May, which is expected to reflect rapid profit growth and the effectiveness of penetrating into new growth areas. Catalysts: Announce results for the second half of FY17; launch new products; attract more market attention; and obtain orders from new Chinese customers.