· MITECH posted a record 2QFY26 core net profit of RM52.5m (+62.2% YoY, 72.2% QoQ), lifting 1HFY26 core net profit to RM82.9m (+61.8% YoY). The results were above our expectation.
· We remain bullish on MI’s earnings trajectory over the medium to long term, driven by SMBU demand to strengthen further into 2H26 versus 1H26, while SEBU momentum is expected to sustain on Mobility & Wearables and HPC & Memory demand; together with the proposed SGX listing of Mi Material remains on track for completion by 4Q26.
· Raise FY26F/FY27F/FY28F CNP by 2.3%/2.2%/2.3% to RM137.7m/RM152.6m/RM171.7m (from RM134.6m/RM149.3m/RM167.8m), on higher revenue contribution from SMBU, together with a sustained improvement in pricing power and ASPs. Upgrade TP to RM6.38 (from RM6.23) based on 37x PE (+2SD) applied to the higher FY27F EPS of 17.2 sen (previously 16.8sen). Reiterate BUY.
Above estimates. Excluding an unrealised gain on foreign exchange (-RM3.7m), Mi reported a 2QFY26 CNP of RM55.2m (+78.3% QoQ, +250.0% YoY), bringing 1HFY26 CNP to RM86.2m (+158.4% YoY). The result came in above expectations at 61% of our full-year forecast and 64% of consensus estimates, driven by higher sales volume, improved ASPs, an optimised product mix, better operational efficiency and favourable forex.
QoQ. Revenue rose 34.7% QoQ to RM226.0m from RM167.8m in 1QFY26, with SEBU growing 11.6% QoQ to RM93.9m (1Q26: RM84.2m) and SMBU surging 58.3% QoQ to RM131.3m (1QFY26: RM82.9m), primarily driven by strong demand for semiconductor equipment and material sales within all the business segments.
YoY. Revenue surged +46.7% YoY to RM226.0m (2QFY25: RM154.1m), driven primarily by SMBU which doubled to RM131.3m (+100.1% YoY) on robust solder ball demand, while SEBU grew a more modest +6.2% to RM93.9m. 2QFY2025 PATAMI more than tripled, up 249.8% YoY to RM55.2m (2QFY25: RM15.8m), aided by higher sales volume, better ASPs, improved product mix and favourable FX.
YTD. 1HFY26 revenue rose 43.9% YoY to RM393.8m, with SMBU up a strong 91.1% to RM214.2m and SEBU up 10.3% to RM178.1m, primarily supported by robust customer demand and improved average selling prices, particularly for semiconductor material sales.
Outlook. Management expects continued momentum into 2HFY26, with SEBU on sustained Mobility & Wearables and HPC & Memory demand for the Mi Series die-sorting platform; SMBU on further strengthening HPC & Memory momentum, cyclical Mobility & Wearables demand and a gradual Automotive & Renewable Energy recovery; STBU's Vanda 1 SiC MOSFET prototype completed fabrication in June and has entered reliability testing, with commercial production targeted 1Q27; and VTBU progressing its powertrain ramp in 2H26. The proposed SGX listing of SMBU is still being finalised at this juncture.
SGX listing remains on track. Management reiterated that the proposed listing of its Semiconductor Materials Business Unit (SMBU), Mi Material Holding, on the Singapore Exchange (SGX) Mainboard remains on track. We continue to view the proposed listing positively as it should enhance the visibility of the fast-growing semiconductor materials business, provide greater financial flexibility to support future expansion and potentially unlock shareholder value through a separate market valuation. Nevertheless, we believe the immediate financial impact is likely to be limited, as MITB will retain a controlling stake of approximately 72.6% post-listing and continue to consolidate Mi Material's financial results. We expect investor attention to remain focused on the final IPO valuation, pricing and offering structure, which will ultimately determine the extent of any value-unlocking and earnings dilution.
Earnings Revision. We raise our FY26F/FY27F/FY28F core net profit forecasts by 2.3%/2.2%/2.3% to RM137.7m/RM152.6m/RM171.7m respectively (from RM134.6m/RM149.3m/RM167.8m), on higher revenue contribution from SMBU, together with a sustained improvement in pricing power and ASPs.
Valuation & Recommendation. We reiterate our BUY rating with a higher TP of RM6.38 (from RM6.23), based on an unchanged PE multiple of 37x applied to a higher FY27F EPS of 17.2sen (previously 16.8sen). We continue to like MITECH for its multi-engine growth optionality, SEBU's advanced packaging leverage, SMBU's materials scale-up via the Johor plant, STBU's SiC market entry, and VTBU's EV powertrain ramp, together with the potential SOTP re-rating catalyst from the proposed SMBU SGX listing.
Risks. Key risks include: (i) unfavourable pricing, structure or delays in the proposed SMBU SGX listing; (ii) a slowdown in semiconductor demand that weighs on SEBU/SMBU order momentum; (iii) unfavourable forex movements given MI's foreign-denominated sales and costs; and (iv) customer concentration risk within its key business segments.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.074794 | 4.107436 |
| EUR | 4.673556 | 4.678380 |
| CNY | 0.603934 | 0.604564 |
| HKD | 0.519941 | 0.523599 |
| SGD | 3.157899 | 3.180212 |