PETALING JAYA: Despite lowering their earnings forecasts for Greatech Technology Bhd
following weaker than expected results for the third quarter of this year (3Q25), analysts remain positive about the company’s long-term outlook.
In a report, Phillip Research said it cut its earnings per share (EPS) forecast for the provider of automation solutions for this year and next by 6% and 47%, respectively, after lowering its margin assumptions.
The research house said the revision reflects uncertainty over tariff costs, redundancy expenses at its Slovakia plant, and an ongoing revamp phase before a ramp-up in 2027.
Greatech reported core net profit of RM14mil in 3Q25 after excluding RM6mil from foreign exchange gains, warranty provisions and share grant expenses, representing a decline of 63% quarter-on-quarter (q-o-q) and 59% year-on-year (y-o-y).
This brought core net profit for the first nine months of this year (9M25) to RM91mil, down 25% y-o-y.
The company’s revenue for 3Q25 dropped 17% despite a 10% increase y-o-y, with its earnings dragged down by a softer earnings before interests, taxes, depreciation, and amortisation margin and a higher effective tax rate.
“While 9M25 revenue was in line with our expectations, achieving 76% of our full-year forecast, 9M25 core net profit missed our forecast and consensus, accounting only for 50% and 52%, respectively,” Phillip Research said.
Nevertheless, Greatech’s order book remains intact at RM698mil (up 15% q-o-q), which provides earnings visibility until next year.
The company foresees RM500mil to RM600mil in new orders by the end of this year, according to the research house.
“While the order book outlook saw better clarity, we expect sequential quarter margins to further decline due to the higher staff costs from additional hiring and further lay-off costs for the Slovakia plant.”
Greatech warned that 4Q25 margins will also face pressure from tariff-related costs, noting that it is currently engaging customers on an appropriate cost-sharing arrangement.
Phillip Research has maintained a “buy” call on the stock, and lowered the target price to RM2.30 from RM2.44 based on an unchanged target price-earnings multiple of 32 times next year’s earnings per share.
Meanwhile, Maybank Investment Bank Research (Maybank IB) revised its earnings forecasts for Greatech downwards by between 8% and 33% for this year to 2027 to reflect margin pressure.
The research house said that it is maintaining a “buy” rating while lowering its target price to RM2.11 from RM2.28 based on an unchanged PE of 28 times next year’s earnings.
It noted that the company’s 17% q-o-q revenue decline for 3Q25 occurred as volumes normalised in the e-mobility and solar segments following elevated activity in 2Q25.
Additionally, Maybank IB largely attributes the contraction in Greatech’s net profit margins from 9.1% q-o-q to 6.6% to higher tax expenses arising from deferred tax liability movements.
“Management indicated that margins are likely to stay at this level in the near term given elevated headcount at the newly acquired subsidiary and a potential one-off tariff cost-sharing impact in 4Q25.”
On further risk factors, the research house said that Greatech’s earnings may be affected by a downturn in the photovoltaic and electric vehicle industries, foreign exchange volatility, tariff uncertainty.
