PETALING JAYA: Analysts expect Sam Engineering and Equipment
(M) Bhd’s near-term earnings to remain muted, as weaker equipment sales persist while potential upside from an aerospace turnaround and new financial year 2027 (FY27) business initiatives has yet to materialise.
The group’s latest third-quarter FY26 (3Q26) results, with core profit after tax of RM12.4mil, down 5% quarter-on-quarter and 66% year-on-year, brought nine-month FY26 (9M26) core earnings to RM39.5mil, falling short of most research houses’ expectations.
Hong Leong Investment Bank (HLIB) Research said, in a note to clients, that SAM Engineering’s aerospace segment momentum remains intact, underpinned by higher aircraft deliveries expected in 2026.
It added that margin expansion should follow once the ongoing relocation of operations from Singapore to Thailand is completed.
According to SAM Engineering’s previous update, the new Ban Bueng 2 plant in Thailand is currently undergoing qualification and is on track for full production in the first quarter of 2026.
Recently, the group highlighted several initiatives expected to ramp up in FY27, including onboarding two new non-US front-end (FE) customers, a recovery in the hard disk drive business, and the securing of high-power system-level test equipment contracts.
“In our view, these developments remain nascent and will likely take some time to translate into earnings,” the research house added.
Meanwhile, the group’s equipment segment weakness is largely in line with guidance from SAM Engineering’s US-based FE customer, which expects softer sales through the first half of 2026 (1H26) due to tighter US export controls on China, followed by a recovery in 2H26.
HLIB Research noted that risks remain, as SAM Engineering could be disproportionately impacted by weaker China sales in the near term and may not fully capture upside from robust global wafer fab equipment (WFE) spending.
To reflect lower sales volume, a softer US dollar, and reduced margin assumptions, the research house has cut its FY26 to FY28 earnings per share forecasts by 17%, 7% and 9%, respectively.
HLIB Research maintained a “hold” call on the stock with a lower target price at RM3.55 from RM4 previously.
It expects SAM Engineering’s medium-to-long-term growth to be underpinned by customer diversification, ongoing capacity expansion in Thailand, and progress in securing long-term aerospace and FE opportunities.
In a note to clients, Maybank Investment Bank said it maintained a “sell” on SAM Engineering, lowered its forecasts, and reduced its target price to RM3.30, as the latest 3Q26 results fell short of expectations.
However, it remains on the lookout for re-rating opportunities, given SAM Engineering’s exposure to leading global WFE makers.
Key risks include ringgit strength, slower-than-expected order recovery, and weak order visibility.
Despite the weaker earnings, Sam Engineering remains positive on both the aerospace and semiconductor sectors.
Shares of SAM Engineering fell 12 sen yesterday to close at RM3.18.
