SCOMNET: Analyst Maintains Buy Despite Earnings Shortfall, Anticipates 2026 Recovery

TA Securities has reiterated its “Buy” recommendation on Supercomnet Technologies Berhad (Scomnet), despite the company reporting full-year 2025 net profits that fell below both the firm’s and market consensus expectations. The investment bank anticipates a significant recovery for Scomnet in 2026, driven by new product offerings and robust demand from its medical segment.

Performance Review

For the financial year 2025, Scomnet recorded a net profit of RM26.0 million, trailing TA Securities’ estimate by 13.0% and consensus by 7.2%. On a year-on-year basis, FY25 net profit declined 16.2%, with revenue falling 6.5% to RM140.1 million. The fourth quarter of 2025 saw a sharper decline, with net profit dropping 38.3% quarter-on-quarter to RM4.8 million.

This subdued performance was primarily attributed to lower-than-expected revenue stemming from reduced sales across all segments, shipment delays, the strengthening of the Ringgit, higher losses from the automotive division, and increased labour costs due to minimum wage hikes. The medical segment remained the primary revenue contributor, accounting for 91% of sales in 4Q25. While no dividend was declared for FY25, TA Securities expects a final dividend of 1.0 sen to be announced in April 2026.

Outlook and Growth Drivers

Despite the challenges faced in FY25, TA Securities maintains an optimistic outlook for Scomnet’s rebound in 2026. This recovery is expected to be fueled by sustained strong demand within the medical segment, alongside the introduction of new product offerings, including smart cables, electroencephalogram (EEG) cables, and intravenous controllers. The firm also highlights Scomnet’s strategic moves to advance along the value chain, which are projected to enhance profit margins.

While the automotive segment is anticipated to remain a drag on overall performance in the first half of 2026 due to soft orders from a major customer, a turnaround is expected in the second half of 2026, following successful audit clearance by a French Tier-I automotive parts supplier for the EU and US markets in October 2025.

Analyst’s Stance

Following the incorporation of FY25 results into its model, TA Securities has revised its FY26 and FY27 earnings estimates downwards by 14.2% and 12.4% respectively. Consequently, the target price (TP) for Scomnet has been adjusted to RM0.86 per share (based on 24x CY26 EPS), reflecting the updated earnings forecasts. Despite the revision, the firm reiterates its “Buy” recommendation, citing the company’s strong growth prospects and anticipated recovery in the coming year. The new target price of RM0.86 implies a significant upside from the last traded price of RM0.60.