Company Coverage
NationGate Holdings (NATGATE MK): 1H26: Below Expectations, But Clear Earnings Acceleration In 2027
BUY (Upgraded)
Current price:
Target price:
Upside:
Previous TP :
RM1.41
RM1.88
+33.3%
RM0.82
Analyst
Analyst
Highlights
Results missed our expectation as the recovery in both revenue and margins progressed more slowly than anticipated against our earlier optimistic assumptions for 2026.
That said, we see an earnings inflection from 4Q26, 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.
Upgrade to BUY with a revised target price of RM1.88 (previously RM0.82), following earnings recalibration based on a rollover 24x 2027F PE.
Analysis
Below expectation. NationGate Holdings (NatGate) reported a 2Q26 net profit of RM10.9m (21x qoq, -79% yoy), bringing 1H26 net profit to RM11.4m (-89% yoy). Excluding both the unrealised and realised forex factors and other one-off items, adjusted net profit came in stronger at RM22.7m in 2Q26 (+231% qoq; -2% yoy) and RM29.5m in 1H26 (-71% yoy).
This accounts for 38%/51% of our and consensus full-year expectations respectively. The deviation to our numbers was due to the slower-than expected recovery in both revenue and margins against our earlier optimistic assumptions for 2026. The group declared a 0.25 sen interim dividend, implying a ytd net DPS of 0.50 sen and a 105% payout.
Highlights
Results missed our expectation as the recovery in both revenue and margins progressed more slowly than anticipated against our earlier optimistic assumptions for 2026.
That said, we see an earnings inflection from 4Q26, 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.
Upgrade to BUY with a revised target price of RM1.88 (previously RM0.82), following earnings recalibration based on a rollover 24x 2027F PE.
Analysis
Below expectation. NationGate Holdings (NatGate) reported a 2Q26 net profit of RM10.9m (21x qoq, -79% yoy), bringing 1H26 net profit to RM11.4m (-89% yoy). Excluding both the unrealised and realised forex factors and other one-off items, adjusted net profit came in stronger at RM22.7m in 2Q26 (+231% qoq; -2% yoy) and RM29.5m in 1H26 (-71% yoy).
This accounts for 38%/51% of our and consensus full-year expectations respectively. The deviation to our numbers was due to the slower-than expected recovery in both revenue and margins against our earlier optimistic assumptions for 2026. The group declared a 0.25 sen interim dividend, implying a ytd net DPS of 0.50 sen and a 105% payout.
BUY (Upgraded)
Current price:
Target price:
Upside:
Previous TP :
RM1.41
RM1.88
+33.3%
RM0.82
Analyst
Analyst
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