GREATEC: Technology Firm Delivers Solid Half-Year Performance Amidst Evolving Sector Dynamics
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Greatech Technology Berhad reported a robust first-half performance for fiscal year 2025 (1HFY25), with core profit increasing 14.4% year-on-year to RM83.6 million. These results were in line with both internal and market expectations, positioning the company at approximately 46% of full-year forecasts.
Performance Review
The stronger half-year earnings were primarily driven by increased sales in the e-mobility sector and initial contributions from the energy storage and consumer electronics segments. This growth partially offset reduced revenue from the solar and medical segments.
However, the second quarter of FY25 (2QFY25) saw core profit dip to RM43.3 million from RM49.9 million in the corresponding quarter of the previous year. This decline was attributed to a contraction in the normalised gross margin, which fell from 33.3% to 28.5%. The margin compression stemmed from a significant portion of ongoing projects being in the assembly stage, typically incurring higher start-up costs. Despite this, 2QFY25 revenue showed resilience, rising 13% year-on-year to RM232.7 million, with e-mobility emerging as the largest sales contributor, making up 60% of the quarter’s total revenue.
Future Outlook and Challenges
As of August 2025, Greatech’s order book stood at RM607 million, a slight decrease from RM755 million in May FY25. The order book remains diversified, with e-mobility, solar, semiconductors, and medical sectors being key contributors. During 2QFY25, the company successfully secured RM174 million in new contracts. Management aims to secure an additional RM700 million in new orders by year-end and is confident in securing RM200-300 million in solar job replenishment.
The company acknowledges a restructuring process at its newly acquired Manz Slovakia operation, which is projected to incur a total loss of RM10 million for FY25. Despite this, Greatech’s management is targeting expansion to 12 divisions and anticipates sales growth of over 50% for FY26F, signalling further product diversification.
Analyst View
The investment bank, Public Investment Bank Berhad, maintains a Neutral rating on the stock with an unchanged target price of RM1.80.
