PETALING JAYA: Electronic manufacturing services provider EG Industries Bhd
, which recently released third quarter ended March 31, 2026 (3Q26) results, is expected to see improved financial performance.
The growth is expected to be driven by optical modules and other products related to the growth of artificial intelligence (AI) technology.
Analysts remained positive on the stock despite the company’s 3Q26 financial performance coming in below consensus, as they believe sustained demand for AI-related products as well as improved margins would help support earnings.
They also pointed to an improved pipeline of orders in supporting the company’s outlook.
Phillip Capital Research said despite 3Q26 results declining 21% quarter-on-quarter largely attributable to reduced working days during the quarter amid festive holiday periods, margins improved 2.8 percentage points.
This was driven by a more favourable revenue mix with increasing contribution from 800 gigabits per second (Gbps) optical modules and better production yields.
Similarly, core net profit margin rose to a record high of 7.6% compared to 6.8% in 2Q26. The research house reiterated a “buy” rating with an unchanged target price (TP) of RM2.10. It expects further earnings momentum and margin expansion in 4Q26, supported by the continued ramp-up of higher-margin 800 Gbps optical modules.
These modules now account for more than 90% of optical module production volume.
“EG’s growth outlook is increasingly anchored on its exposure to the 800 Gbps optical module segment, a key beneficiary of accelerating AI-driven data centre expansion globally, supported by robust order visibility, which should drive sustained earnings and margin expansion.”
