ViTrox posted 1QFY26 core net profit of RM60.8m (+120% YoY, +36% QoQ), exceeding both our and consensus expectations, coming in at 31% of our FY26 forecast of RM194.8m. The outperformance was driven by stronger-than-expected billings from both ABI and MVS segments, alongside improving margins and a lower effective tax rate.
The group's effective tax rate declined to 17.6% (4QFY25: 24.9%) following the full quarter impact of the MIDA pioneer tax incentive granted to VTSB. The group proposed a final dividend of 1.18 sen per share for FY25, bringing total FY25 DPS to 1.81 sen (FY24: 1.20 sen).
We raise our FY26/27 core net profit forecasts to RM237.1m/RM289.4m (from RM194.8m/RM241.4m) by imputing higher sales assumptions and improving margins. Maintain BUY rating with a higher TP of RM7.04 (from RM5.30), derived from a 46x PE multiple applied to FY27F EPS of 15.3 sen.
Results beat. ViTrox posted 1QFY26 core net profit of RM60.8m (+36.3% QoQ, +119.7% YoY), exceeding both our and consensus expectations, coming in at 31% of our FY26 forecast of RM194.8m and 31% of consensus forecast as well. The positive deviation stemmed from stronger-than-expected billings from both ABI and MVS segments, alongside improving margins. 1QFY26 results were arrived after adjusting for fair value losses on financial instruments (RM6.2m), forex loss (RM2.4m), net inventories written down (RM1.1m) and impairment gain on financial assets (-RM0.5m).
Dividend. The group proposed a final dividend of 1.18 sen per share for FY25, bringing total FY25 DPS to 1.81 sen (FY24: 1.20 sen).
QoQ. Revenue dipped 8% QoQ from RM290.4m to RM267.1m, a typical seasonal decline following the year-end peak. Despite the softer topline, PBT edged up 1.3% QoQ to RM61.7m, demonstrating the group’s ability to maintain margins through product innovation and cost discipline. Core net profit jumped 36% QoQ to RM60.8m (4QFY25: RM44.6m), largely driven by a significantly lower effective tax rate of 17.6% (4QFY25: 24.9%) as the MIDA pioneer tax incentive for VTSB took full effect during the quarter. The subsidiary’s income tax exemption covers activities related to 4D Advanced Industrial Automation Systems for semiconductor advanced packaging and AI smart factories, valid from September 2025 to September 2030.
YoY. Revenue nearly doubled, surging 89% YoY from RM141.1m to RM267.1m, driven by heightened demand for both Automated Board Inspection (“ABI”) and Machine Vision System (“MVS”) solutions as the global semiconductor industry recovery gained traction. The strong topline expansion was also underpinned by growing demand and penetration into high growth
verticals like advanced packaging, AI server manufacturing, and data centre buildouts. Core net profit surged 120% YoY, aided by better operating leverage, a favourable product mix, and a lower effective tax rate. The EBIT margin expanded to 23.1% (1QFY25: 20.4%) while core net margin improved to 22.8% (1QFY25: 19.6%), reflecting the improved scale efficiencies.
Balance Sheet. The group remains in a net cash position with RM411.7m in cash and cash equivalents as at 31 March 2026, marginally up from RM409.2m at end-FY25. Total borrowings stood at RM86.9m (denominated in USD), mainly to finance the construction of Campus 3.0 in Batu Kawan. Inventories rose 19% QoQ to RM356.3m, while receivables grew 13% QoQ to RM422.6m, reflecting the strong revenue run rate. Contract liabilities surged to RM90.3m from RM32.2m, signalling healthy order visibility ahead. The group also incorporated a new subsidiary, ViTrox Technical Academy Sdn. Bhd. on 1 April 2026, focused on TVET for high-tech manufacturing.
Outlook. We anticipate a sustained growth trajectory throughout 2026 as the global semiconductor industry enters a robust expansion phase. The group's 1QFY26 book-to-bill ratio stood at 1.3x, indicating strong demand momentum (4QFY25: 1.1x). This is driven by escalating AI demand, data centre infrastructure expansion, and the sharp escalation in memory prices. Furthermore, in response to the semiconductor upcycle and AI infrastructure capex boom, management has further emphasised strategic focus on advanced packaging applications and is introducing new products such as the QX1 Series for ultra-high-resolution 3D X-ray inspection. The near-tripling of contract liabilities QoQ (RM90.3m vs RM32.2m) also bodes well for revenue visibility in coming quarters.
Forecast. Due to the results beat, we raise our FY26/27 core net profit forecasts by 21.7%/19.9% to RM237.1m/RM289.4m by imputing higher sales unit assumptions for both ABI and MVS segments and reflecting the improving margin trajectory. We also continue to expect sequential earnings expansion supported by the AI-driven demand upcycle, expanding NPI pipeline, and lower effective tax rate from the MIDA pioneer incentive.
Valuation & Recommendation. We maintain BUY rating with a higher TP of RM7.04 (from RM5.30), derived from a 46x PE multiple applied to FY27F EPS of 15.3 sen. Our target multiple, which represents +1SD above ViTrox’s 5-year historical average PE of 40x, reflects our view that the stock is poised for a rerating on the back of: (i) rising exposure to high-growth segments such as HPC/AI server manufacturing and advanced semiconductor packaging, and (ii) strong double-digit earnings growth over our forecast horizon, supported by the semiconductor capex upcycle to meet AI-driven demand. At the current share price of RM4.98, the stock trades at 40x FY26F core PE, which we view as undemanding given the strong earnings trajectory.
Risks. Appreciation of RM against USD, US semiconductor tariffs and geopolitical uncertainties, slowdown in semiconductor and DC upcycle, potential escalation of trade tensions impacting global semiconductor supply chains.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.949404 | 3.981238 |
| EUR | 4.633763 | 4.638745 |
| CNY | 0.579561 | 0.580180 |
| HKD | 0.504449 | 0.508017 |
| SGD | 3.094283 | 3.116286 |