PETALING JAYA: QES Group Bhd
’s manufacturing segment is still in the red as overhead costs continue to creep for its new plant in Batu Kawan, Penang.
The plant recently obtained its certificate of completion and compliance (CCC) and commercial operations.
Although the plant utilisation rate remains subdued, Apex Research expects the segment to gradually improve in the coming quarters on the back of ongoing demand recovery for back-end semiconductor equipment.
In a note to clients, the research house said, “We understand management is exploring opportunities to penetrate the vast though competitive Chinese market via collaboration with local partners.”
To date, the semiconductor test equipment group’s order book remains stable at RM86mil, comprising RM71mil for equipment distribution and RM15mil from the manufacturing division.
On the group’s results for the third quarter of this year (3Q25), Apex Research said QES’ core profit of RM3mil – down 49% quarter-on-quarter and 41% year-on-year – brought core profit for the first nine months of this year to RM10.2 million, which fell short of both its forecast for the full year.
The shortfall was driven by higher-than-expected overheads, which resulted in a margin miss.
Core net profit also declined 41% y-o-y and 25% year-to-date.
This is mainly due to lower gross profit margins stemming from cost pressure and increased competition, and wider losses in the manufacturing division amid subdued plant utilisation and higher operating expenses for the new Batu Kawan plant.
Following the change in covering analyst, Apex Research said it has revamped QES’ financial model and reintroduced its earnings forecasts for this year and next year of RM13.3mil and RM17.4mil, representing an adjustment downwards of 8% and 24%, respectively, against the previous forecasts.
The revisions primarily reflect the weaker-than-expected 3Q25 performance, which prompted a recalibration of margin assumptions and operating-cost run rates, the research house said.
Post-earnings adjustments, Apex Research maintained a “hold” rating on the stock with an unchanged target price of 42 sen.
The risks to its call include slower-than-expected utilisation at the Batu Kawan plant, rising competition within the automated test equipment space, and uncertainty surrounding the US semiconductor trade policies.
