PETALING JAYA: Technology-related companies are expected to see a more constructive second quarter of financial year 2026 (2Q26) earnings season compared to recent quarters.
Hong Leong Investment Bank (HLIB) Research said positive surprises and upward revisions will be more prominent than earning disappointments.
“We expect more upbeat commentary in 3Q26 and the second half of financial year 2026 (2H26) and, importantly, believe management may provide firmer 2027 guidance given strong visibility from their key customers,” the research house said.
It highlighted that semiconductor upcycles tend to progress from a re-rating phase into an earnings upgrade phase.
HLIB Research expects to see strong potential for changes in companies like Vitrox Corp Bhd
– with an increase of 7% to 12% in revenue for 2Q26.
It added that the next catalyst for the company will be a breakthrough in sub-micron inspection capability.
HLIB Research also expects UWC Bhd to end its financial year ending July 31, 2026 with record quarterly revenue and earnings in 4Q26 driven by sustained order momentum across both front-end and back-end key customers.
HLIB Research said Inari Amertron Bhd usually has a weaker 4Q so the focus will be on 1Q27, particularly its radio frequency ramp for the upcoming new smartphone models and the outlook for datacom photonics.
“We believe the market expects unit sales to remain healthy despite a likely US$100 to US$200 price hike, as demand has historically been fairly inelastic to pricing – also supported by a sizeable installed base,” the research house noted.
On investor interest, it said they have remained engaged but are growing increasingly selective – drawn to tech stocks’ strong growth trajectory and those who are more cautious on elevated valuations.
“Nonetheless, appetite remains intact, with investors still looking for attractive ideas to add exposure, while evidence has been reflected in the recent market flows.”
With that, HLIB Research has maintained an “overweight” call on tech stocks, with its top picks including UWC, Inari Amertron, ITMax System Bhd and Unisem Bhd.
“Beyond hardware, we see emerging opportunities further downstream in the artificial intelligence (AI) value chain, with ITMAX standing out as a potential application-layer beneficiary by leveraging its proprietary closed-circuit television data and smart city platform to unlock AI monetisation opportunities.”
Separately, HLIB Research said the potential of these companies being included in the FBM KLCI 50 will bode well for the industry.
Taking note of the higher share price volatility of technology companies, rankings around the cut-off can shift quickly ahead of the review.
“On that basis we see ViTrox as the only near-certain inclusion, with its market capitalisation sitting comfortably inside the Top 50, and would expect positioning to build earlier.
“Frontken Corp Bhd and Inari Amertron sit closer to the margin and may attract more interest as the expected December review approaches.”
