NationGate surges despite Q2 profit plunging nearly 80%

 The tech stock rose as much as 19% to RM1.84 today, its highest level in over a year.

NationGate’s Q2 FY2026 net profit plunged 79% to RM10.9 million from RM52.15 million a year ago. (NationGate pic)

PETALING JAYA:

NationGate Holdings Bhd shares soared today despite the electronics manufacturing services provider’s second quarter net profit tumbling nearly 80%.

The shares rose as much as 19% or 35 sen to RM1.84 today, its highest level in over a year. The stock gave up some of its gains to close 14.1% or 21 sen higher at RM1.70, valuing the group at RM3.87 billion. The stock has surged 87% year to date.

The Penang-based company was the most traded stock on Bursa Malaysia with 172.1 million shares changing hands, an over 4-fold jump from its average daily trading volume of 38.1 million shares over the past four weeks.

Its net profit plunged 79% to RM10.9 million from RM52.15 million a year ago in its second quarter ended June 30 (Q2 FY2026) as earnings normalised from a high base a year earlier. Quarterly revenue fell 32% to RM1.77 billion from RM2.6 billion.

The drop in profit was mainly due to a sharp fall in sales from its data computing segment and less favourable foreign-exchange movements, according to its bourse filing last Friday.

NationGate recorded higher revenue from its other segments including networking and telecommunications, industrial instruments, consumer electronics and automotive. However, data computing remained its largest contributor, generating about RM1.5 billion or 85% of total quarterly revenue.

The company maintained its interim dividend at 0.25 sen per share, payable on Sept 22.

Despite the sharp drop in its net profit, its Q2 results met consensus estimates of various research houses.

UOB Kay Hian upgraded NationGate to a “buy” with a higher target price (TP) of RM1.88 despite Q2 earnings coming in below its expectations.

“We see an earnings inflection from Q4 FY2026, driven by new optical module programmes, booming AI data centre demand and improving yields.

“We expect the growth trajectory to accelerate further into 2027, as higher ramp-up, better yields and stronger operating leverage drive an anticipated S-curve earnings recovery,” the research firm said in a note today.

Meanwhile, Kenanga Research maintained its “outperform” call on the stock with a TP of RM2.14, in addition to keeping its earnings forecasts unchanged.

It said NationGate’s adjusted Q2 net profit of RM28.3 million came above its expectations and within consensus.

At the current share price, the research house said the earnings potential from its new photonics customers has “yet to be meaningfully priced in”, presenting an attractive risk-reward profile.

Listed in 2022, NationGate is a turnkey one-stop solutions provider, focusing on the assembly and testing of electronic components and products. It is also a contract manufacturer of US AI chip powerhouse Nvidia Corp.

Its co-founder and managing director Ooi Eng Leong and his wife Tan Ah Geok have a controlling stake in the group.

Ooi, 57, holds 48.76% while Tan has a 6.52% interest, according to the company’s 2025 annual report. - FMT