
Muted Q1 shows ongoing strain for Malaysian tech, EMS: HLIB

By Azanis Shahila Aman
KUALA LUMPUR: The first quarter (Q1) 2025 earnings season for Malaysian technology and electronics manufacturing services (EMS) companies fell short of expectations, weighed down by muted volumes and ongoing margin pressure, said Hong Leong Investment Bank Bhd (HLIB).
The bank said Malaysian tech hardware and EMS companies delivered an underwhelming Q1 2025 earnings season, as most names missed both its forecasts and consensus estimates.
Of the 14 names reporting, it said nine missed consensus forecasts and five were in line, while within the bank's coverage universe, three missed and three met its numbers.
"Sector earnings were generally weighed down by muted volumes and margin pressure, with the second half of 2025 (2H25) visibility still clouded by customer caution and unresolved tariff risks.
"In contrast, tech/EMS peers in other regions (US/EU/Taiwan) have broadly reported and guided robust Q1 2025/Q2 2025 earnings (even for analogue-centric companies), highlighting the relative underperformance of the Malaysian counterparts," it said.
Post-results, HLIB said consensus earnings cuts have been relatively modest, reflecting a "wait-and-see" stance rather than wholesale downgrades.
Given the risk of further earnings disappointment in 2H25, the bank maintains a neutral view on the sector and advocates selective exposure to names with visible structural growth drivers.
"We favour UWC Bhd (Buy, target price: RM 2.78) and retain Frontken Corp Bhd (Hold, target price: RM 4.00) and Inari Amertron Bhd (Hold, target price: RM 2.10) as core names to accumulate on pullbacks.
"A key near-term risk to monitor is the forthcoming Section 232 semiconductor tariff decision," it added.
Source : muted-q1-shows-ongoing-strain-malaysian-tech-ems-hlib
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