Broker: Maybank Investment Bank Berhad
Date of Report: July 2, 2025
PIE Industrial: Supercomputer Recovery and Growth Prospects Drive Bullish Outlook
Overview: PIE Industrial’s Strategic Position in the Electronics Manufacturing Sector
PIE Industrial Berhad (PIE MK) stands out as a Shariah-compliant, Malaysia-based electronics manufacturing services (EMS) provider, delivering comprehensive solutions for a diverse range of industrial applications. With a robust technological foundation and a client portfolio that includes high-growth sectors such as supercomputing and networking, PIE continues to attract investor attention amid global supply chain shifts and trade policy uncertainties.
Broker’s Investment Thesis and Price Target
Current Share Price: MYR 4.40
12-Month Target Price: MYR 4.70 (+7%)
Rating: BUY
Valuation Basis: 17x FY26E earnings per share, aligned with the company’s 5-year forward PE mean.
The investment case remains robust, anchored by expectations of a near-term demand rebound, new customer opportunities, and the upcoming commissioning of PIE’s P6 facility.
3Q25 Supercomputer Demand Rebound in Focus
PIE Industrial entered 2025 with momentum, driven by strong order loadings from its supercomputer customer. In the first quarter, orders from this segment accounted for an impressive 37% of revenue. However, softer market sentiment led to a slight dip in second-quarter volumes. The outlook is bullish for the third quarter of 2025, with order volumes expected to return to Q1’s robust levels as market demand recovers.
Customer Onboarding: Delays but Not Denials
Prospective client onboarding remains cautious, with many potential customers opting to delay final decisions until there is more clarity on the global tariff landscape. The current retaliatory tariff pause period expires on July 8, after which a more definitive direction on new client engagements is expected.
A positive development is PIE’s successful pilot run with a new US-based switches customer, the result of proactive V+1 initiatives. However, the final onboarding decision for this customer, like others, remains on hold pending tariff resolution.
Financial Performance and Forecasts: Key Metrics and Insights
| FYE Dec (MYR m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
1,217 |
975 |
1,313 |
1,980 |
2,146 |
| EBITDA |
93 |
88 |
113 |
158 |
172 |
| Core Net Profit |
55 |
59 |
71 |
106 |
113 |
| Core EPS (sen) |
14.3 |
15.3 |
18.4 |
27.7 |
29.3 |
| Core EPS Growth (%) |
(19.9) |
7.1 |
20.3 |
50.3 |
6.0 |
| Net DPS (sen) |
7.0 |
7.0 |
7.4 |
11.1 |
11.7 |
| Net Dividend Yield (%) |
2.2 |
1.1 |
1.7 |
2.5 |
2.7 |
| ROAE (%) |
12.6 |
8.5 |
10.8 |
15.0 |
14.4 |
| EV/EBITDA (x) |
13.4 |
26.1 |
14.2 |
10.5 |
9.8 |
| Net Gearing (%) |
0.5 |
net cash |
net cash |
net cash |
net cash |
Growth Ratios and Profitability
Revenue Growth: A significant rebound is forecasted for FY25E (+34.6%) and FY26E (+50.9%) after a contraction in FY24A (-19.8%).
EBITDA Margin: Stable, ranging from 7.7% in FY23A to an estimated 8.0% in FY27E.
Payout Ratio: Conservative, with an average of around 40-50% over the forecast period.
Balance Sheet and Liquidity
PIE maintains a strong balance sheet with a net cash position throughout the forecast period.
Current Ratio: Robust at 2.4–2.9x, indicating solid liquidity.
Cash Conversion Cycle: Improving trend from 117.9 days in FY23A to an estimated 61.6 days in FY27E, reflecting enhanced operational efficiency.
Major Shareholders and Market Profile
Pan-International Industrial Corp.: 51.4%
WONG YOKE FONG: 6.1%
Public Mutual Bhd.: 5.4%
Market Capitalization: MYR 1.7B (USD 402M)
Free Float: 37.1%
Risks and Potential Headwinds
Investors should be aware of several key risks:
- Uncertain demand outlook and potential for weaker order loadings.
- Operational delays, especially related to customer onboarding and project ramp-up.
- High customer concentration risks.
- Rising operational costs and broader macroeconomic pressures.
- Adverse developments in global trade policy, particularly tariffs.
Historical Share Price Performance
52-week high/low: MYR 6.63 / MYR 2.88
Recent Share Price Trend: From MYR 7.50 in January 2023, the price moved to MYR 5.10 in March 2023, and then to MYR 4.70 in May 2023.
Absolute Returns (as of report date): +7% (1M), +12% (3M), -30% (12M)
Relative to Index: +5% (1M), +11% (3M), -27% (12M)
Company Description
PIE Industrial Berhad is a one-stop EMS provider, delivering end-to-end electronics manufacturing services for various industrial applications. The company’s growth is underpinned by both established and emerging customers, particularly in segments with high technological entry barriers.
Analyst’s Conclusion: PIE Industrial Well-Positioned for Rebound and Growth
With a BUY rating reaffirmed, investors can expect PIE Industrial to benefit from a recovery in supercomputer-related demand in 3Q25, potential onboarding of new clients post-tariff clarity, and operational scaling through the commissioning of the P6 facility. The company’s strong balance sheet, improving operational metrics, and diversified growth drivers make it a compelling pick in Malaysia’s dynamic technology sector.
Contact Information and Analyst Coverage
Lead Analyst: Lucas Sim ([email protected], +603 2082 6824)
Maybank Investment Bank Berhad, Kuala Lumpur
Disclaimer
This article reflects the research findings and market views as of July 2, 2025, and is intended for informational purposes for investors and market watchers.
