| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Hong Leong Investment Bank (HLIB) has maintained its positive outlook, driven by steady operational progress and strong structural tailwinds within the semiconductor industry. The research house reiterated its “BUY” call with a target price of RM4.95, based on a targeted PE of 37x for FY26 EPS, highlighting a robust medium- to long-term growth trajectory.
Performance Review
The company reported a 3Q25 core net profit of RM41.6 million, which was broadly in line with both HLIB’s and consensus expectations, representing a 16% year-on-year increase despite a 20% sequential decline. This performance brought the 9M25 earnings to RM124 million, accounting for 70% and 72% of HLIB’s and consensus full-year forecasts, respectively.
Despite the overall inline performance, the sequential margin experienced a decline. This was primarily attributed to softer contributions from the Oil & Gas sector and higher upfront costs associated with ongoing expansion initiatives. Management, however, remains constructive regarding operational progress.
Future Outlook and Growth Catalysts
HLIB remains bullish on the company’s prospects, underpinned by several key factors. The semiconductor industry continues to benefit from powerful structural tailwinds, including increasing AI-driven demand, the ongoing migration to leading-edge nodes, and sustained capital expenditure expansion by foundries. These elements are expected to provide a strong and durable growth backdrop.
Strategic advancements are also in motion, with the commissioning of new advanced-node cleaning lines in Taiwan and facility upgrades in Singapore already underway. Furthermore, the company is actively evaluating merger and acquisition opportunities with US-based companies, aiming to enhance its technological capabilities and improve earnings visibility.
The company’s fortress balance sheet, boasting net cash of RM563 million (equivalent to 35 sen per share), provides substantial financial flexibility. This strong liquidity position is crucial for funding ongoing capacity expansion initiatives across Taiwan, Singapore, and the US, while also offering significant downside protection for investors.
