GREATEC: Robust Order Book and Cost Controls Drive Earnings Beat

Greatech Technology has reported a strong first half of 2025, with core profit significantly surpassing AmInvestment Bank’s expectations. The positive performance, fueled by robust order book growth and strategic cost management, has prompted an upward revision of future earnings estimates.

Performance Review

For the first half of 2025 (1H25), Greatech Technology’s core profit surged by 18% year-on-year, reaching RM83 million. This result exceeded AmInvestment Bank’s forecasts, although it aligned with broader market consensus. Consequently, the investment bank has revised its FY25F earnings projection upwards by 25%. This strong showing is attributed largely to higher e-mobility revenues and the anticipated resumption of customer capital expenditure (Capex) activities following the finalisation of US tariffs.

Order Momentum and Future Growth

The company is targeting to secure an additional RM700 million in new orders over the next three months. This ambitious goal is expected to elevate its total order book to approximately RM900 million by year-end. This momentum is set to be driven by a replenishment of solar-related orders, alongside contributions from the medical and energy storage sectors. With RM235 million in new orders already secured in 1H25—a 34% increase year-on-year—Greatech is well-positioned for stronger earnings in FY26F, as customer Capex activity is expected to pick up.

Navigating Near-Term Challenges

Despite the positive outlook, Greatech acknowledges potential near-term pressures on margins. These are primarily due to one-off costs related to tariffs and ongoing manpower restructuring efforts in its Slovakia operations, which are currently running at a loss. However, the group is actively mitigating these challenges by engaging in negotiations with a major customer to determine the absorption of additional US tariff costs, a situation expected to be isolated to specific projects. Furthermore, a restructuring initiative is underway in Slovakia to reduce manpower expenses and improve profitability.

Investment Recommendation

AmInvestment Bank has reiterated its “BUY” recommendation for Greatech Technology, maintaining an unchanged target price of RM2.55 per share. This valuation is based on a target Price-to-Earnings (PE) ratio of 30x, applied to blended CY26/27 EPS. The bank anticipates that the finalisation of US tariffs will lead to a narrowing of the company’s valuation gap, making it an attractive investment.