MITECH posted a record 3QFY26 core net profit of RM69.0m (+114.3% YoY, +34.0% QoQ), lifting 9MFY26 core net profit to RM151.0m (+92.9% YoY). The results came in above our expectations at 110% of our previous full-year forecast and 89% of consensus, on another record SMBU quarter and a rebound in SEBU billings.
SMBU revenue rose 17.3% QoQ to RM154.0m at a 35.8% PBT margin, with management guiding 4QFY26 revenue to exceed 3Q; SEBU recovered 13.0% QoQ at a 35.6% margin. Mi Material Holding (SMBU) listed on the SGX Mainboard on 28 Oct 2026 at S$1.80 (market cap S$891m), with MITECH retaining 73.7%.
Raise FY26F/FY27F/FY28F core net profit by 40.6%/27.1%/24.1% to RM193.6m/RM193.9m/RM213.1m on higher SEBU volume, lower FY26F effective tax rate, partly offset by STBU and VTBU losses and 26.3% minority interest in Mi Material.
We move to a sum-of-parts valuation with Mi Material marked at its SGX price, deriving a Higher TP of RM7.04 (from RM6.38). With the share price having run to RM6.86, we downgrade our rating from BUY to HOLD.
Above estimates. Excluding an unrealised gain on foreign exchange (-RM2.2m), Mi reported a 3QFY26 CNP of RM69.0m (+34.0% QoQ, +114.3% YoY), bringing 9MFY26 CNP to RM151.0m (+92.9% YoY). The result came in above expectations at 110% of our full-year forecast and 89% of consensus estimates, driven by higher SMBU volumes and ASPs, a better product mix, and a lower effective tax rate of 18.8% (2QFY26: 23.6%) from the pioneer status at Mi Equipment and HNTE preferential tax at Suzhou.
QoQ. Revenue rose 13.3% QoQ to RM256.0m from RM226.0m in 2QFY26, with SEBU growing 7.0% QoQ to RM100.4m (2Q26: RM93.9m) and SMBU surging 17.3% QoQ to RM131.3m (1QFY26: RM82.9m), primarily driven by seasonal Mobility & Wearables strength and sustained HPC & Memory momentum. Core net profit grew 34.0% QoQ, ahead of the 13.9% PBT growth, on the lower tax charge.
YoY. Revenue surged +29.9% YoY to RM256.0m (3QFY25: RM197.1m), led by SMBU which more than doubled (+109.3% YoY) to RM154.0m on volume, ASPs and specialty alloy mix. SEBU revenue fell 18.7% YoY to RM100.4m against a high base of equipment deliveries in 3QFY25 (RM123.5m), reflecting customer purchasing cycles. Core net profit rose 88.0% YoY and core net margin improved to 27.0% (3QFY25: 18.6%).
YTD. 9MFY26 revenue grew 38.0% YoY to RM649.8m, with SMBU up 98.3% to RM368.2m (56.7% of group revenue) and SEBU down 2.3% to RM278.5m. Core net profit rose 92.9% YoY to RM151.0m (9MFY25: RM78.3m), primarily supported by higher sales volume and lower effective tax rate on pioneer and preferential tax incentives.
Outlook. Management expects SEBU momentum to continue into 4QFY26 on Mobility & Wearables and HPC & Memory demand, and guides FY26 SEBU revenue to double-digit growth, which implies a 4Q of at least c.RM100m. SMBU expects 4QFY26 revenue to exceed 3Q on HPC & Memory and continued Mobility & Wearables strength, with new programme qualifications in HPC & Memory. STBU has slipped: extended foundry lead times have prolonged Vanda 1 reliability testing, with the second wafer lot now targeted for mid-November and commercial production pushed to 3Q27 (from 1Q27); Vanda 2 remains on schedule. VTBU is on track for its FY26 delivery targets. We expect STBU and VTBU losses to remain elevated through FY27 as the EV powertrain unit scales and SiC certification completes.
Mi Material listed. Mi Material Holding (SGX: MIM) listed on the SGX Mainboard on 28 Oct 2026 at S$1.80 per share, valuing it at S$891m (c.RM2.8bn). The IPO comprised 93.4m new and cornerstone shares raising S$168.2m gross (S$157.9m net) for Mi Material and 26.0m vendor shares sold by MITECH for S$46.8m, while 8.98m shares were distributed in specie (1 for 100). MITECH retains 73.7% (72.7% if the 5.0m-share over-allotment is exercised), so SMBU remains fully consolidated with a 26.3% minority interest from 28 Oct; the vendor gain is booked in equity rather than earnings. Proceeds fund seven new lines at Senai (three ready 4QFY26, four by end-2027), four additional Taiwan lines, a US R&D and demonstration centre and a Singapore R&D laboratory, lifting group solder sphere capacity from 6.6-8.9 trillion to 11.3-15.3 trillion p.a. Mi Material intends to pay at least 20% of net profit as dividends for the period to FY26 and for FY27. At the IPO price, MITECH's stake is worth c.RM2.06bn or RM2.30 per MITECH share.
Earnings Revision. We raise our FY26F/FY27F/FY28F core net profit forecasts by 40.6%/27.1%/24.1% to RM193.6m/RM193.9m/RM213.1m. The upgrade reflects (i) a recalibrated SMBU on the 9M run-rate and prospectus capacity plan; (ii) a higher SEBU volume and margin base (iii) a lower FY26F effective tax rate of 23%; partly offset by (iv) STBU and VTBU losses of RM37.6m/RM32.0m/RM30.0m, and (v) the 26.3% minority interest in Mi Material of RM6.4m/RM42.2m/RM46.6m.
Valuation & Recommendation. With Mi Material now separately quoted, we switch our valuation to a sum-of-parts, deriving a higher TP of RM7.04 (from RM6.38). With the share price having run to RM6.86, we downgrade our rating from BUY to HOLD. We value (i) SEBU, STBU and VTBU at 37x FY28F PE (unchanged, +2SD of MITECH's three-year mean) on ex-Mi Material earnings of RM82.3m, or RM3,045m (RM3.39/share) and (ii) MITECH’s 73.7% stake in Mi Material at 25x PE on FY28F attributable earnings of RM130.8m, or RM3,270m (RM3.64/share). This gives an SOP of RM6,319m on the enlarged 898.3m share base. Our 25x for Mi Material is above the 21-22x trailing multiples of listed solder sphere peers Shenmao and MK Electron. We think the premium is justified by Mi Material’s top-three global position (24.0% SAM share), and the capacity-led growth from Senai.
Risks. Key risks include: (i) movements in Mi Material's SGX share price and any holding-company discount applied to MITECH; (ii) silver and tin price volatility, given SMBU ASPs embed raw-material pass-through; (iii) a slowdown in advanced packaging and HPC & Memory demand affecting SEBU and SMBU orders; (iv) customer concentration (Mi Material's top five direct customers were 41.4% of 1HFY26 revenue); (v) unfavourable forex movements; and (vi) prolonged STBU and VTBU losses or further certification delays.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.043840 | 4.076443 |
| EUR | 4.515479 | 4.524729 |
| CNY | 0.608956 | 0.610200 |
| HKD | 0.515274 | 0.519484 |
| SGD | 3.155451 | 3.181015 |