KUALA LUMPUR: The day's most actively traded counter, SMRT Holdings Bhd
, saw intense selling pressure with traders marking down its share price by 56% as the market halted for the midday lunch break.
The stock plunged 25 sen to 19.5 sen a share to end the morning session with a tally of 201 million shares crossing hands. Earlier, the share nearly hit limit down after plummeting 29 sen to 15.5 sen.
The frenetic selling of SMRT equity came after Hong Leong Investment Bank (HLIB) said in its latest report it was downgrading the stock to a "sell" on the back of a "sharp earnings reset".
HLIB set a target price of 32 sen on SMRT, down from RM1.24 previously, in line with the earnings downgrade.
In its report, HLIB said SMRT's management had indicated in a conference call last Friday that its deployment pace for Tenaga Nasional (TNB) is expected to slow materially in the coming years, following the opening up of its major client, TNB's supervisory control and data acquisition (Scada) vendor base.
"The loss of TNB’s one-off deployment revenue came as a negative surprise and indicates a sharp earnings reset ahead," it said.
In 1QFY26 (ended Sept 30, 2025), about 38% of SMRT's group earnings were driven by one-off deployment revenue, with managed services contributing the remaining 62%. HLIB estimates that over 90% of the one-off component was attributable to TNB.
However, SMRT has guided that site deployments are expected to contract materially from FY27 onwards to fewer than 100 sites from a historical run-rate of about 3,000 sites.
"While managed services provide some residual earnings support – with about 70% of managed sites linked to TNB and contracts expected to run for the next three years – renewal visibility beyond this period remains low, in our opinion.
"With the one-off deployment revenue from TNB rolling off, we expect SMRT’s earnings to decline significantly in FY27," said HLIB.
The research firm added that its previous "buy" call on SMRT was no longer intact, as it was anchored on earnings upside from TNB.
It said growth from the financial service industry and early-stage penetration into Indonesia's power sector has "limited scope" to fully offset the near-term earnings gap from TNB.
HLIB slashed its earnings forecasts on SMRT by 18% to 44% over the next three years, reflecting the lower site additions of 1,000 to 2,000 each year.
"The modest net increase of about 1,000 sites post-FY27F assumes minimal incremental deployment from
TNB; and site additions from the FSI segment in the Philippines and Indonesia."
Bursa Malaysia suspended intraday short-selling (IDSS) on SMRT until 8.30am tomorrow (Jan 20) after the stock breached the price limit.
