PETALING JAYA: The outlook for Dagang Nexchange Bhd
(Dnex) appears to be positive on improving prospects across its semiconductor, energy and information technology divisions, underpinned by growing demand for silicon photonics and a recovery in upstream oil production.
BIMB Research reiterated its “buy” call on the stock, while raising its sum-of-parts-based target price to 40 sen from 35 sen previously.
In a note, BIMB Research said Dnex’s first quarter ended March 31, 2026 (1Q26) core net profit of RM19.3mil exceeded expectations, accounting for 37% of its full-year forecast.
The stronger-than-expected performance was mainly driven by a quicker turnaround at Silterra Malaysia Sdn Bhd.
On a year-on-year basis, Dnex rebounded sharply from a net loss of RM83.1mil in the corresponding quarter last year, which had been affected by additional deferred tax liabilities arising from the extension of the UK’s Energy Profits Levy.
“Silterra returned to profitability, supported by a better product mix and higher average selling prices, offsetting weaker wafer volumes,” the research house said.
However, BIMB Research noted that the group’s energy division recorded a 56.4% decline in core pre-tax profit due to earlier disruptions at the Anasuria oil cluster, which had capped production at around 80%.
The company’s revenue also slipped 9.9% year-on-year because of the weaker US dollar.
Quarter-on-quarter, revenue and core net profit rose 24.5% and 503.9% respectively, driven by broad-based improvements across all segments.
The semiconductor division returned to profitability on recovering sales volumes and stronger margins, while the energy segment rebounded from a weak 4Q25, aided by elevated crude oil prices.
BIMB Research raised its earnings forecasts for financial year 2026 (FY26) to FY28 by between 1.7% and 47.9%, after revising Silterra’s margin assumptions upward.
Moving forward, the research house expects Dnex to benefit from accelerating artificial intelligence-driven data centre expansion and rising adoption of high-speed optical connectivity, which are boosting demand for silicon photonics solutions.
It also projected the energy division to stage a “meaningful turnaround” in the second half of FY26, as production at the Anasuria cluster normalises following the resolution of legacy gas disruptions.
First oil production from the Abu cluster is expected by 4Q26, while its flagship projects are forecast to continue supporting recurring earnings and cashflow visibility, BIMB Research noted.
