Kenanga Research said PIE was in advanced discussions with several prospective customers.
PETALING JAYA: Analysts continue to like electronics manufacturing services provider PIE Industrial Bhd
(PIE) for its comprehensive skill set, competitive advantage as well as a diversified and evolving client base.
In a report to clients, Kenanga Research said it was maintaining its target price at RM5.52 a share for the stock, based on financial year ending Dec 31, 2025 (FY25) earnings per share pegged to an unchanged price earnings ratio of 21.6 times, representing a 10% discount to peers.
PIE was trading at RM3.69.
Risks to the research house’s “outperform” call on the stock included loss of orders from/non-renewal of contracts by its key customer, labour shortage, rising labour cost as well as unfavourable currency movements.
Citing key takeaways from a recent meeting with the company, Kenanga Research said PIE was in advanced discussions with several prospective customers, particularly from its parent – Foxconn Group which is seeking to diversify from Vietnam due to labour constraints and country-of-origin compliance issues.
The discussions are progressing rapidly, driven by growing uncertainty surrounding US trade policies, it said, adding that management had indicated that negotiations were close to materialising within the next three months.
The prospective client base spans automotive, robotics, medical and the telecommunications sectors, it added.
According to Kenanga Research, PIE has 35,400 sq m of available production space across its P1, P3, P5, and P6 facilities – representing about 30% of its total manufacturing footprint.
This buffer is maintained to accommodate demand surges, although it may also be allocated to new customers with attractive margin and volume potential, it said.
“Should the available space be fully utilised, PIE estimates that an additional 300 to 400 employees would be required to support operations.”
It said PIE has commenced mass production of switches for one customer H, with the switches segment expected to contribute RM60mil in annual revenue.
“Meanwhile, discussions for its server-related business remain ongoing, with management now moderating its earlier RM1bil revenue target from this customer.
“Separately, PIE disclosed that a client linked to Foxconn has expressed interest in relocating its production of switches from Vietnam although negotiations are still ongoing.
“We had incorporated a RM600mil revenue contribution from customer H into our model and will reassess our forecasts once further clarity emerges.”
It also said one customer N has postponed the launch of its new model due to ongoing uncertainties surrounding US tariffs.
Although discussions on a potential return to PIE are underway, the customer is currently managing excess inventory produced in China, it said.
