ATECH delivered 4Q25 core earnings of RM18.8m (+17% QoQ, +0.6% YoY), bringing FY25’s sum to RM70.3m (+9%). The results were inline with our FY25F forecast at 102%.
4Q25 core net profit was up 17% QoQ due to (i) seasonally stronger billings from Communications and IoT products (+10%; Customer M usually ramps up orders at year-end), (ii) improved sales from Electronic Devices (+18%; order recovery from its oil and gas customer following a steep plunge in 3Q25) and (iii) higher public holiday count and staff costs in 3Q25.
Decrease our FY26/27F forecasts by 4%/5% but maintain BUY rating on ATECH with a lower TP of RM1.00 (from RM1.12) – based on an unchanged PE valuation of 19x FY26F EPS.
Closing inline. ATECH delivered 4Q25 core earnings of RM18.8m (+17% QoQ, +0.6% YoY), bringing FY25’s sum to RM70.3m (+9.1%). The results came in line with our FY25F forecast at 102%. 4Q25 results were arrived after adjusting for EIs comprising forex loss (RM1.7m) and fair value loss on short-term investment (RM0.6m).
QoQ. Core net profit was up 17% due to (i) seasonally stronger billings from Communications and IoT products (+10%; Customer M usually ramps up orders at year-end), (ii) improved sales from Electronic Devices (+18%; order recovery from its oil and gas customer following a steep delivery plunge in the preceding quarter) as well as (iii) higher public holiday count and staff costs in the preceding quarter.
YoY. Despite slightly higher revenue (+3%), core earnings stayed broadly stable (+0.6%) as unfavourable forex movement and higher tax expenses diluted the group’s profitability.
YTD. Core bottom line gained 9% thanks to higher revenue contribution from Communication & IoT products (+11%; higher volume allocation from key customer and improved demand for mission-critical communication devices) and Semiconductor Components (+40%; stronger run rate amidst output ramp for Customer F). However, it was partially offset by softer revenue from Electronics Devices (-41%; US tariffs uncertainties and higher revenue base from its oil & gas customer in FY24).
Dividend. Declared special dividend of 2.0 sen (ex-date: 12 Mar), bringing FY25 DPS declared to 5.0 sen (after adjusting for two-for-one bonus issue) – implying an attractive yield of 7% based on current share price.
Outlook. We expect loading volumes from its key US-based communication customer to remain steady, supported by resilient demand for mission-critical devices. Meanwhile, we reckon Customer F (5G and IoT modules) will remain supportive of the group’s margins with improving production efficiency and gradual capacity increase. ATECH’s progress on onboarding new automotive customers at P5 is positive following lengthy qualification tests with automotive OEMs for TPMS, which will aid in driving the utilisation rate at P5 as it remains underutilized at roughly c.15%. We also gathered that ATECH is in talks to acquire new customers in the industrial space to fill up P5. Despite its resilient portfolio and commendable net margin profile (FY25: c.10%), we reckon its near-term outlook may be tempered by the sharp appreciation of the MYR against the USD.
Earnings Revision. We decrease our FY26/27F forecasts by 4%/5% after accounting for lower revenue growth and margin assumption resulting from the forex woes.
Valuation. Post-adjustments, we maintain BUY rating on ATECH but with a lower TP of RM1.00 (from RM1.12), based on an unchanged PE valuation of 19x FY26F EPS, with a 0% ESG premium/discount reflecting its three-star ESG rating. We like ATECH as an industrial-centric EMS provider with resilient earnings profile, backed by stable demand growth from its key customer, solid margin delivery and its continuous efforts in diversifying its customer base. The group also stands to benefit from supply chain diversification amid heightened geopolitical uncertainties.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.878434 | 3.909825 |
| EUR | 4.590523 | 4.595422 |
| CNY | 0.567561 | 0.568180 |
| HKD | 0.495911 | 0.499417 |
| SGD | 3.065484 | 3.087199 |