Broker: Maybank Investment Bank Berhad
Date of Report: August 12, 2025

PIE Industrial: Navigating Tariff Headwinds and Awaiting Growth Catalysts in 2025

Muted Short-Term Outlook as Tariff Hurdles Delay Growth

PIE Industrial, a prominent Malaysian electronics manufacturing services (EMS) provider, faces a subdued near-term outlook, as recent macroeconomic challenges and shifting global trade policies have deferred its expected earnings growth. According to Maybank Investment Bank’s latest analysis, the company’s growth prospects remain intact but are now delayed, prompting a continued HOLD recommendation with a target price of MYR 3.56, reflecting a 17x FY26E PER at -0.5 standard deviation of its five-year forward mean.

Key Customer Orders Diverted Amid Tariff Disparity

A critical factor affecting PIE’s performance in the first half of 2025 was the diversion of orders from its major supercomputer customer, which historically contributed 35% of 1H25 revenues. When Indonesia secured a lower 19% import tariff, compared to Malaysia’s 25%, the customer redirected all outstanding orders to an Indonesian EMS provider. Recovery is underway, with PIE negotiating to reclaim these volumes, but the earliest potential rebound is targeted for 4Q25. Additionally, the completion of PIE’s P5 plant expansion has been postponed from 3Q25 to 4Q25, further delaying capacity-driven growth.

Tariff Reduction Reignites Customer Discussions

PIE remains in ongoing talks with prospective clients aiming to diversify supply chains out of China and Vietnam. These discussions were previously stalled due to Malaysia’s less competitive 25% tariff. However, following a reduction to 19%—now on par with regional competitors—negotiations have resumed. Onboarding timelines are still uncertain, but the resumption of order loadings from other existing key customers is a positive sign. Quarterly revenues are projected to exceed MYR 150 million from FY25 onward as a result.

Investment Recommendation: HOLD Pending Clearer Growth Signals

– Maybank maintains its financial forecasts for PIE Industrial, awaiting concrete signs of order recovery and successful onboarding of new customers. – The HOLD rating and price target of MYR 3.56 are reaffirmed. – Key downside risks: prolonged customer onboarding delays, weak demand visibility, potential order losses, subdued operating leverage, and persistent labor shortages. – Upside potential: faster-than-expected onboarding of new customers or a stronger rebound in order loadings.

Company Overview and Market Statistics

Financial Performance: Recent Trends and Forecasts

Share Price Performance and Volatility

– Share price as of report: MYR 3.73 – 52-week high/low: MYR 6.47/2.88 – Price performance: – 1-month: -8% (absolute), -10% (relative) – 3-month: -17% (absolute), -18% (relative) – 12-month: -32% (absolute), -31% (relative)

Value Proposition and Growth Drivers

PIE Industrial stands out as a one-stop EMS provider in Malaysia, offering services from R&D and product development to logistics. The company is well-positioned to benefit from the global trend of supply chain diversification, especially in the switches, servers, and supercomputer markets. PIE’s parent company, Hon Hai/Foxconn, enhances its global exposure and credibility.
Key competitive strengths:
Over 280,000 square feet of available production capacity to serve new customers.
An additional 85,000 square feet expansion (P5 plant) scheduled for completion by 4Q25.
Growing presence with leading industry players and increased focus on trade diversion opportunities.

Financial Metrics and Growth Outlook

– Projected revenue CAGR of 15% over 2024-2027. – Core net profit expected to grow at a CAGR of 11% over the same period. – Growth to be primarily driven by the switches & server segment, supercomputer orders, and telecommunications customers. – Quarterly revenues projected to consistently surpass MYR 150 million from FY25 onwards.

Risks and Opportunities Ahead

Upside Potential:

• Wins from new or existing customer contracts, especially if onboarding accelerates.
• A stronger USD against MYR would positively impact revenue.
• Securing large, high-margin orders.

Downside Risks:

• Significant declines in global demand for industrial electronics.
• Adverse trade policies and further tariff changes.
• Unexpected production delays due to onboarding, labor shortages, or operational issues.
• High customer concentration risk: top two clients represent around 48% of group revenue in 2024.

Key Financial Ratios and Balance Sheet Highlights

Liquidity, Leverage, and Efficiency Metrics

• Cash Conversion Cycle improved from 117.9 days (FY23) to a projected 61.8 days (FY27E)
• Current ratio remains healthy, above 2.4x throughout forecast period
• Net gearing projected to remain at net cash position from FY24 onwards
• Capex/revenue ratio expected to remain between 3.8% and 5.6%

Conclusion: Awaiting Catalysts in a Challenging Environment

PIE Industrial is navigating a challenging macroeconomic and industry-specific landscape marked by shifting tariffs, delayed customer onboarding, and evolving global supply chain strategies. While short-term earnings growth is muted and key customer orders were lost to more favorable tariff environments, recent reductions in Malaysia’s import tariffs have rekindled discussions with major clients and could pave the way for future growth.
Investors should watch for successful onboarding of new customers and the recovery of previously lost orders as primary growth triggers in the coming quarters. Until clearer signals emerge, Maybank’s HOLD rating and cautious outlook remain prudent.

Contact Information and Disclosures

For further details, investors are encouraged to contact Maybank Investment Bank Berhad or visit their research offices across Malaysia, Singapore, London, Hong Kong, Indonesia, India, Philippines, Thailand, and Vietnam.
This report has been prepared by Lucas Sim, analyst at Maybank Investment Bank Berhad, specializing in the technology sector in Malaysia.