PETALING JAYA: Wentel Engineering Holdings Bhd
’s order flows from its major security screening equipment customers and semiconductor equipment manufacturers in the electrical and electronics (E&E) segment are expected to remain broadly stable in the first half of 2026 (1H26), says Apex Securities Research.
The research house said this was in line with guidance from key wafer fabrication equipment (WFE) players, which have flagged flattish front-end demand amid inventory digestion in China, tighter export controls and “cleanroom constraints”.
Inventory digestion generally refers to the process by which a business or industry reduces, sells off, or works through accumulated, excess, or unsold inventory over a specific period.
It helps clear out excess stock to free up capital, reduce storage costs, and restore a balanced supply chain.
“We expect Wentel’s financial year 2026 (FY26) earnings growth to skew toward 2H26, in view of a rebound in front-end WFE sales led by the memory supercycle and a robust capital expenditure outlook from leading foundries.
“Meanwhile, the new Lot 815 plant should provide incremental capacity to support rising orders.
“Nonetheless, the recent appreciation of the ringgit against the greenback may dampen earnings growth, although there is upside risk to our effective tax rate (ETR) assumptions arising from tax incentives tied to the new plant investment,” the research house added.
Apex Securities Research said it is trimming its FY26 and FY27 earnings forecasts by 3% and 2%, respectively, due to weaker ringgit-translated revenue and margins from lowered US dollar-ringgit assumptions (of 4.03 to 4.00).
This is partly offset by a lower FY26 and FY27 ETR of 22% (from 24%) based on tax incentives arising from the new plant investment.
The research house is maintaining its “buy” call on the stock, with a slightly lower target price of RM0.48 , down from RM0.50 previously.
It cites Wentel’s deepening exposure to the higher-margin E&E segment, undemanding valuation, and ample rerating potential as the group delivers earnings growth and demonstrates successful scaling of its E&E operations.
However, Apex Securities Research noted that key downside risks include high foreign-exchange exposure, tariff risks, geopolitical uncertainties and customer concentration risk.
