KUALA LUMPUR: AmInvestment Bank has downgraded its outlook on Malaysia’s technology sector from ‘overweight’ to ‘neutral’, citing a weaker-than-expected growth outlook following the announcement of broader and more punitive reciprocal tariffs by the US.
In its sector update released on Friday, the investment bank highlighted that ongoing policy uncertainty and geopolitical headwinds are likely to dampen demand and delay capital expenditure across the sector.
While Malaysia remains relatively well-positioned compared to regional peers in terms of tariff exposure, AmInvestment cautioned that prolonged policy indecision could discourage new investment inflows.
As a preemptive move, AmInvestment has trimmed earnings forecasts and target price-to-earnings (P/E) multiples for the tech firms under its coverage. It now applies valuation multiples at one standard deviation below the five-year average to reflect the sector’s more cautious outlook.
The bank revised down FY2025 revenue projections by 13% and earnings by 23% for covered tech stocks. It now forecasts a 16% year-on-year earnings decline for the sector in 2025—markedly lower than the consensus estimate of 31% growth.
Notable rating and target price adjustments include:
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ViTrox Corporation Bhd (KL:VITROX): Downgraded to ‘hold’, target price reduced from RM4.40 to RM2.40
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Malaysian Pacific Industries Bhd (KL:MPI): Downgraded to ‘hold’, target price cut from RM27.80 to RM13
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Inari Amertron Bhd (KL:INARI): ‘Hold’ maintained, target price reduced from RM2.05 to RM1.50
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Pentamaster Corporation Bhd (KL:PENTA): ‘Hold’ maintained, target price lowered from RM3.25 to RM2.45
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Greatech Technology Bhd (KL:GREATEC): ‘Buy’ rating retained, but target price trimmed from RM2.60 to RM1.60
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VS Industry Bhd (KL:VS): ‘Buy’ retained, target price reduced from RM1.45 to 85 sen
Despite the downgrades, AmInvestment remains optimistic about companies with strong US client exposure, such as Greatech and VS Industry, citing their resilience in adapting to the evolving tariff landscape.
