GREATEC: Strong Order Book and Strategic Growth Drive Positive Outlook, Target Price Raised

Recent financial results have shown a dip in core profit, falling below analyst expectations for the nine months ended FY25. However, a robust order book and strategic expansions into high-growth sectors signal strong future prospects, driving a positive outlook.

Performance Review

The company reported a 9MFY25 core profit of RM101.5 million, marking a 13% year-on-year decline. This performance was below both internal and street expectations, achieving only 57% and 59% of full-year forecasts, respectively. The weaker-than-expected results were primarily attributed to a higher effective tax rate of 17.7% (compared to 10.8% in 9MFY24) and increased operating costs, including freight charges, labour, and tariffs.

In the third quarter of FY25, core profit tumbled by 60% year-on-year to RM18.9 million from RM47.2 million. This was compounded by a normalized gross margin slip from 34.9% to 25.7%, largely due to the absence of key project installations which typically yield higher margins, alongside losses from Slovakia operations. Despite these pressures, 3QFY25 revenue showed resilience, climbing 2% year-on-year to RM192.6 million, primarily driven by stronger contributions from the E-Mobility and semiconductor sectors.

Future Outlook and Strategic Growth

Despite the immediate earnings headwinds, the company’s future prospects are bolstered by a strengthening order book and clear strategic direction. As of November 2025, the group’s order book stood at a robust RM697.9 million, an increase from RM607 million in August 2025. This diverse order book is composed of solar (32%), data centres (23%), semiconductor (16%), E-Mobility (15%), medical (9%), pharmaceutical (3%), and consumer (2%).

Management is actively pursuing significant opportunities in high-growth segments. For instance, the company has secured a RM160 million data centre-related project and is eyeing another RM150 million project in Southeast Asia, with an expected net margin of around 20%. In the solar segment, a RM149 million contract for perovskite solar and Series 6 reconditioning projects has been secured. The E-Mobility sector has a RM49 million job, even amid some project delays.

Furthermore, the medical technology segment is poised for substantial growth, with RM39 million in orders secured and a target of another RM150 million from new customers. The segment is expected to commercialize in 2027, with ambitious sales targets of RM500-600 million. The company has also set an aggressive target to achieve a RM1.5 billion order book by 2026, underpinning confidence in its long-term growth trajectory and strategic positioning across critical industrial sectors.