Skyechip Berhad - A Bumpy Debut, AI Silicon Runway Still Intact
Tue, 18-Aug-2026 06:43 am
by Research Team • Apex Research

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SKYECHIP (5357)

Target Price (RM)

3.76

Recommendation

Buy

·   1QFY27 CNP of RM15.3m was below our expectations at 16% of our FY27F, but in line with 23% of consensus, mainly due to lumpy milestone-based revenue recognition.

·   FY27F-FY29F CNP forecasts cut by 22.5–26.3% to RM72.3m/RM93.9m/RM126.8m, reflecting more conservative revenue timing assumptions.

·   Medium-term growth remains intact, supported by HBM3E/HBM4 memory interface IP, custom ASIC opportunities and potential ARM CSS/AFA access.

·   Maintain BUY with a lower TP of RM3.76 (previously RM4.99), based on a P/E of 81.3x applied to mid-point FY27F/FY28F core EPS of 4.6sen (previously 6.1sen).

 

Below estimates, but largely timing-related. The Group’s 1QFY27 CNP of RM15.3m was arrived after adjusting listing expenses (RM2.5m), and fair value gains (-RM1.2m), which is equivalent to 16% of our FY27F CNP forecast and 23% of market consensus. While the result was below our expectations, we believe the shortfall was primarily attributable to the timing of milestone-based revenue recognition rather than a meaningful deterioration in underlying demand.

 

QoQ. Revenue declined by 15.7% QoQ to RM49.6m (4QFY26:58.9m), mainly due to decline in silicon IP revenue amid the timing of project milestones. Excluding the listing expenses (RM2.5) and fair value gains (-RM1.2m), core net profit declined by 49.1% QoQ to RM 15.3m (4QFY26: RM 30m).

 

YoY. Not applicable, as SKYECHIP was newly listed with no corresponding period for comparison.

 

Outlook. We remain constructive on SKYECHIP's structural growth story, underpinned by the ongoing ramp of HBM3E/HBM4 memory interface IP licensing and custom ASIC wins (AI inference, RISC-V SoC) across its Chinese, American and Korean customer base. The 1QFY27 US/China revenue split of 54.6%/42.1% affirms the geographic diversification thesis flagged at initiation, easing our concern over China concentration (62.6% of FY26 revenue). On the ARM front, SKYECHIP signed a definitive agreement with MIDA for AFA token access in June 2026, though CSS terms remain under negotiation. That said, revenue recognition remains inherently lumpy under its project milestone-based licensing model, as seen in the 15.7% QoQ dip this quarter, and the Group has yet to meaningfully deploy its RM352.0m IPO proceeds (2.9% utilised), which should underpin capacity and R&D investment through FY27F-FY29F.

 

Earnings Revision. We cut FY27F/FY28F/FY29F CNP forecasts by 22.5%/26.3%/20.6% to RM72.3m/RM93.9m/RM126.8m (from RM93.2m/RM127.4m/RM159.6m). The revisions reflect the weaker-than-expected 1QFY27 contribution and, more importantly, a more conservative assumption on the timing of milestone-based silicon IP and custom ASIC revenue recognition. While we expect earnings to remain lumpy, we continue to forecast strong medium-term growth as HBM-related IP demand, custom ASIC opportunities and potential ARM-related initiatives scale.

 

Valuation & Recommendation. We maintain our BUY call with a lower TP of RM3.76 (previously RM4.99), based on a P/E of 81.3x applied to a lower mid-point FY27F/FY28F core EPS of 4.6sen (previously 6.1sen).

 

Risks. Lumpy quarterly revenue recognition, execution risk on the ARM CSS/AFA platform rollout, lower-than-expected AI-related design wins.

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