Greatech Technology Berhad (KLSE:GREATEC) Q1 2025 Report

Greatech Technology Berhad (KLSE:GREATEC) is an automation solution provider and investment holding company operating in the Technology sector, specifically Technology Equipment. The company designs and constructs customized factory automation and system integration solutions. Their products, ranging from single automated equipment to full production line systems, are used in the manufacturing of solar modules, semiconductors, and consumer electronics. More recently, their focus includes solutions for the e-mobility, battery, medical, and automotive industries.

1. Financial Performance Highlights (1Q2025 vs. 1Q2024)

Revenue & Profit Growth (YoY)

📈 Revenue: RM175.39M (+15.5% YoY)
💰 Gross Profit: RM58.45M (+63% YoY)
📊 Gross Profit Margin: 33.33% (vs. 23.62% in 1Q2024)
💵 Profit Before Tax (PBT): RM42.95M (+24.1% YoY)
📉 EPS: 1.47 sen (vs. 1.28 sen in 1Q2024)

The revenue growth is driven by higher revenue recognized Production Line Systems (PLS) in the E-Mobility and Solar sectors.

2. Sequential Performance (1Q2025 vs. 4Q2024)

🔻 Revenue: ↓14.8% QoQ (Due to project phasing)
🔺 Gross Profit Margin: ↑33.33% (vs. 32.00% in 4Q2024)
💸 PBT Decline: ↓RM20.69M (Due to forex loss vs. gain in 4Q2024)

The lower revenue was primarily due to the Group entering the design and planning phase of a significant new project, where revenue recognition is naturally lower, but is expected to contribute meaningfully in subsequent quarters as execution progresses.

Gross profit margin increased from 32.00% in 4Q2024 to 33.33% in 1Q2025. This improvement, despite lower gross profit, was primarily driven by lower project-related expenses. Normalized GP margin without net warranty impact was 32.47% in 1Q2025 and 30.56% in 4Q2024.

The decrease in both PBT and normalized PBT margin (23.63% in 1Q2025 vs 29.47% in 4Q2024) was mainly driven by a net foreign exchange loss of RM2.82 million in 1Q2025, compared to a net foreign exchange gain of RM14.74 million in 4Q2024. This shift was primarily due to the higher impact of the strengthening of the USDollar against the Malaysian Ringgit during 4Q2024. This was partially offset by lower staff costs compared to 4Q2024.

3. Key Financial Metrics (As of March 2025)

Cash and Cash Equivalents at the end of the financial period were RM230,589 thousand (comprising Cash and bank balances and Short term funds), down from RM232,822 thousand at the beginning of the period.

4. Order Book & Growth Prospects

📌 Current Order Book: RM755M (Visibility until 2H2026)
🎯 2025 New Order Target: RM800M–900M
🚀 Key Growth Drivers:

• Solar: Expected RM400M orders (capex decision by June 2025)

• E-Mobility: Repeat orders expected (July/Aug 2025)

• Medical/Pharma: RM60M expected

• Data Center Engineering: RM80M expected

5. Analyst Ratings & Price Targets

Consensus: 6 BUY, 5 HOLD, 0 SELL

• AmInvest Research retained a BUY rating with a higher 12-month Target Price (TP) of RM1.80 (from RM1.60), based on a target PE of 23x and CY26 EPS. They noted the stock trades more than 1sd below its 5-year average. AmInvest views Greatech as a potential winner of US reshoring, being a proxy to its solar and e-mobility customers expansion in the US. They raised FY25-27F earnings by 12-15% after 1Q25 results were above their expectations.
• PhillipCapital Research maintained a BUY rating with a higher 12-month TP of RM1.90 (from RM1.80) after rolling forward their valuation base year to 2026E. This TP is based on an unchanged target PE of 25x, premised on -1SD its 5-year mean PE. PhillipCapital likes Greatech for its secular growth trajectory. They noted that 1Q25 results were within expectations, accounting for 21% of their and 20% of consensus estimates.
• Maybank Investment Bank (Maybank IB) upgraded its rating to ‘buy’ from ‘hold’, noting the impact of US tariff uncertainties has largely been priced in. As of March 20, 2025, Greatech had six ‘buy’ calls and five ‘hold’ calls from analysts, with no ‘sell’ recommendations, and a 12-month target price of RM2.23, implying a potential 32% upside from the then last traded price of RM1.68.

6. Technical Analysis (June 2025 Outlook)

📊 Pattern: Bullish breakout from 3-week flag
📈 Key Levels:

• Support: RM1.60 / RM1.50

• Resistance: RM1.90 / RM2.00
  🎯 Entry Zone: RM1.60–1.72
  🛑 Stop-Loss: RM1.49

Company Prospects and Strategy

• Management maintained its 2025 new order target at RM800-900mil, despite slower new orders of RM95mil secured YTD as of 3M25. AmInvest believes this is achievable and assumes RM850mil worth of new orders this year, primarily from the solar (RM400mil), e-mobility (RM200mil) and life science (RM200mil) segments.
• As of May 21, 2025, the outstanding order book stood at approximately RM755 million and is expected to last until the second half of 2026. Maybank IB reported a healthy order book of RM785 million as of Feb 13, providing visibility for the next four quarters.
• Major awards are expected over the next few months. The solar customer is expected to firm up capex plans by June 2025. A big e-mobility customer is expected to place repeat orders by July/August 2025.
• The life science segment is gaining traction, with discussions with 15 customers and development of new products. Management expects to secure orders from the pharmaceuticals sector (RM60mil) and for data centre engineering works (RM80mil) this year. Maybank IB anticipates revenue growth of over 50% in FY2025 for the medical segment.
• The company sees potential for long-term growth as it transitions into higher-value process automation.
• The company highlights Malaysia’s neutral stance and strong compliance record as supporting its role as a trusted partner in the U.S. solar and electric vehicles supply chains. They remain optimistic about growth prospects in the U.S. market and beyond.

7. Risks & Challenges

⚠ Geopolitical Risks: US tariffs on solar & semiconductors
💱 Forex Volatility: RM weakness vs. USD impacts margins
📉 High Valuation: P/E (~28x) above Malaysian market average

• The global economic environment is marked by volatility and uncertainty, driven by fluctuating government policies, prolonged tariff disputes, and intensifying geopolitical tensions.
• Despite these challenges, tariffs and trade barriers had no financial impact on Greatech’s operations during 1Q2025.
• However, the company remains vigilant and is prepared to implement mitigating measures, including price recalibrations, should conditions shift unfavourably.
• Maybank IB opined that Greatech may be able to pass on near-to-medium term marginal cost increases to its customers, leveraging force majeure caveats.
• AmInvest Research noted that fearing the worst regarding tariffs and potential delays in project deliveries proved unlikely given the strong 1Q25 results. PhillipCapital noted that management has not observed any delays in existing customer orders due to tariffs.

Final Verdict:

✅ Strengths: Strong order book, margin expansion, US reshoring play
⚠ Watchouts: No dividends, high P/E, tariff uncertainties
🎯 Outlook: Positive growth in solar & e-mobility, but monitor forex & tariffs

Greatech Technology Berhad demonstrated strong year-on-year growth in revenue and profit in 1Q2025, particularly driven by the e-mobility and solar sectors, despite a sequential dip in revenue due to project phasing. Margins improved year-on-year and sequentially. The company maintains a healthy order book providing visibility well into 2026 and has positive prospects, especially tied to US reshoring trends and growth in the e-mobility, solar, and life science segments. Recent acquisitions and incorporations are aimed at strategic expansion and moving into higher-value processes. While the global economic environment and potential tariffs present uncertainties, the company has strategies to mitigate these risks and has not seen significant direct financial impact from tariffs so far. Analyst sentiment appears generally positive with ‘Buy’ recommendations and target prices above the current trading price.

Greatec chart analysis with back-tested strategies.

Disclaimer: This report is compiled solely based on the provided source excerpts for informational purposes and discussion. It does not constitute financial advice. Investment decisions should be made after conducting thorough personal research and consulting with a qualified financial advisor.