PIE Industrial targets earnings recovery through AI server production

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PIE Industrial targets an AI recovery

Highlights

PIE Industrial expects an earnings recovery in the second half of FY2026, driven by higher contributions from telecommunications and AI servers, as well as better cost management.
Utilisation at the 100,000-square-foot Plant 5 is expected to reach 70% by year-end, driven by increased business and production.
PIE Industrial shares rose 2% to RM1.53, giving it a market capitalisation of RM587.6 million, but remain down 42% year to date.

This article was translated from the original. Read the original version by our correspondent here.

Recovery drivers and capacity expansion

As reported by The Edge Malaysia, group managing director Kevin Che Kian Yeap said stronger business volumes, higher revenue contributions and improved cost management underpin the company's expected earnings recovery in the second half of FY2026.

He said telecommunications equipment and AI servers would be the main growth drivers for the group's electronics manufacturing services business in 2026 and 2027. Server system assembly operations are expected to begin contributing progressively from the fourth quarter of 2026, with opportunities in the segment largely driven by customers from China and the broader China-plus-one manufacturing strategy.

Separately, the group expects utilisation at Plant 5, which has 100,000 square feet of production floor space, to reach around 70% by year-end, supported by higher business volumes and ongoing production ramp-ups. PIE Industrial is also broadening its focus to switches and drones while building capabilities in robotics, although the segment is still viewed as a long-term opportunity as the development of technological and manufacturing expertise for commercialisation continues.

Impact on performance and market outlook

PIE Industrial returned to profit in the second quarter ended 30 Jun 2026 after recording two consecutive quarterly losses. However, for the first half of FY2026, the group still posted a net loss of RM1.95 million on revenue of RM322.6 million.

For FY2025, the company recorded a net profit of RM22.6 million on revenue of RM879.2 million, in a year when a major customer was affected by U.S. tariffs. The group's existing box-build projects span consumer electronics, industrial controls, automotive, switches and servers, with server-related projects expected to account for a larger share of revenue and become a key growth driver.

Over the next year, PIE Industrial plans to strengthen its manufacturing capabilities, expand its presence in higher-value electronics manufacturing and secure new customers to broaden its revenue base. At market close, PIE Industrial shares rose 2% to RM1.53 per share, giving it a market capitalisation of RM587.6 million, although the stock remains down around 42% year to date.

In our earlier coverage of the approval of 27 data centre projects under the data centre task force through July 2026, we highlighted the scale of investment at RM225.97 billion and the concentration of projects in Johor, Selangor and Negeri Sembilan. We also outlined the impact on the high-skilled job market, the minimum 30% local content requirement and regular implementation monitoring aimed at strengthening technology transfer and talent development.

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