PETALING JAYA: Vstecs Bhd
is poised for a stronger second half of financial year 2026 (2H26), underpinned by robust artificial intelligence (AI) infrastructure demand, stronger enterprise project deliveries and continued public sector spending.
According to BIMB Research, the company’s quarterly earnings is likely to surpass its second quarter of financial year 2026 (2Q26) levels as project rollouts accelerate in the coming quarters.
It maintained its “buy” call on VSTECS with an unchanged target price of RM2.14, representing a 22% upside from its share price of RM1.75.
The target price is based on 17.2 times financial year 2027 (FY27) forecast price-to-earnings ratio, or 0.5 standard deviation above its three-year historical average.
BIMB Research said VSTECS’ six-month core net profit for FY26 rose 6.9% year-on-year (y-o-y) to RM44.4mil, broadly in line with its estimates and accounting for 38.2% of its full-year forecast.
The figure excluded RM7.6mil in net exceptional gains, comprising RM6.9mil in debt recovery from Logicalis and RM700,000 from other gains.
The research house nevertheless expects the company to make up for the slower earnings recognition in the first half as demand for AI infrastructure remains robust and project execution strengthens.
For 2Q, core net profit rose 5% y-o-y to RM22.7mil, despite revenue surging 31.7% to RM1.08bil.
The topline growth was driven mainly by the enterprise systems segment, where revenue jumped 46.2% y-o-y on higher public sector and enterprise project deliveries.
However, earnings growth was moderated by margin compression, particularly in enterprise systems, where segmental pre-tax profit margin declined to 3.7% from 4%.
Meanwhile, ICT Services remained a bright spot, with segmental pre-tax profit jumping 80.1% y-o-y on the back of higher-margin cloud services.
On a quarter-on-quarter basis, 2Q26 core net profit increased 4.7%, broadly tracking the 3% rise in revenue, while core margin remained stable at 2.1%.
Looking ahead, BIMB Research expects earnings momentum to improve in 2H26, supported by stronger enterprise project deliveries and continued government spending.
“Despite industry-wide component shortages and elevated hardware costs, demand for information and communications technology infrastructure remained resilient across both the enterprise and government segments,” the research house said.
It added that growing contributions from recurring revenue streams and value-added services should support margin resilience and enhance earnings quality over the longer term.
BIMB Research left its earnings forecasts unchanged, projecting core net profit of RM116.3mil for FY26, RM133.3mil for FY27 and RM147.4mil for FY28.
It expects the AI infrastructure spending upcycle, together with the government’s digitalisation agenda, to strengthen VSTECS’ earnings growth prospects.
