Surge in Data Center Orders Drives Target Price Increase to MYR3.34

Overview

Nomura Securities issued this earnings commentary following Greatech Technology’s (GREA.KL) Q1 2026 financial results, highlighting robust growth in the data center business. The company’s backlog surged from MYR1bn to MYR1.7bn over three months, with data center orders comprising over 50%. Management aims to reach ~MYR2bn in backlog by end-2026. Based on management’s positive guidance, Nomura raised its FY27F EPS forecast (+26%) and introduced its first FY28F forecast. The valuation anchor was rolled forward to FY27F, raising the target price from MYR2.27 to MYR3.34 (based on 35x FY27F P/E), implying ~22% upside, and reaffirming the Buy rating.

Core views

**Backlog Growth Exceeds Expectations; Data Centers Emerge as Core Growth Driver** As of May 19, 2026, Greatech’s backlog reached MYR1.7bn (vs. MYR1bn as of February 20, 2026); Nomura estimates ~MYR846mn in new orders added over the past three months. By sector: data centers account for 50–55%, energy 5–10%, electric vehicles (EV) 15–20%, semiconductors 10–15%, and life sciences 10–15%. Management targets ~MYR2bn in backlog by end-2026. **Positive Progress Across Business Segments** Solar: On track to deliver perovskite prototype on schedule; installation planned at client’s U.S. facility in November. Life Sciences: Targeting MYR300–400mn in new orders for FY2026/27; 10 of 15 targeted customers have been secured. Electric Vehicles: Engaging three key customers; has secured a prototype line order from one client, maintaining optimistic demand outlook. Data Centers: Targeting MYR100–200mn in new orders for FY2026 and exploring potential project opportunities in Slovakia. Semiconductors: Focusing on four key customers while expanding smartphone-related product offerings and prioritizing India market development. **EPS Forecast Revisions** Nomura lowered FY26F EPS forecast by 7% (to reflect higher employee costs) but raised FY27F EPS forecast by 26%, reflecting management’s optimistic backlog outlook and increasing confidence in order conversion. Nomura also introduced its first FY28F EPS forecast.

Analysis framework

Nomura adopted a bottom-up approach grounded in the company’s latest quarterly order disclosures, management’s business outlook, and historical financial performance. The analytical framework proceeds as follows: 1. **Order Volume & Segment Breakdown**: Analyzed backlog composition and upcoming new-order targets across business segments (data centers / energy / EV / semiconductors / life sciences) to estimate each segment’s revenue potential. 2. **EPS Forecast Revision**: Adjusted FY26F–FY28F revenue, net profit, and EPS forecasts based on updated order projections and cost developments (e.g., rising labor costs). 3. **Valuation Anchor Roll-Forward**: Shifted the target valuation year from prior years to FY27F, applying a 35x P/E multiple (historical average +1 standard deviation) to derive the revised target price.

Methodology notes

• Industry / Sector Analysis FrameworkSupply-demand framework

  Estimating future revenue using backlog is a core leading indicator for manufacturing/project-based companies’ earnings outlook.

  As an automation equipment and services provider, Greatech’s 'backlog' represents signed but undelivered revenue — the most direct indicator for near-term revenue growth. The report uses the accelerating backlog trend to justify upward EPS revisions.

• Cyclical & Sentiment FrameworkInflection Point Analysis

  Identifying industry cyclical inflection points via quarter-on-quarter order growth trends.

  The report notes that backlog rose from MYR1bn to MYR1.7bn within three months — an increase of ~MYR846mn — signaling accelerating demand in data centers and other sectors, possibly marking the onset of an upcycle.

• Valuation MethodologyPE/PEG valuation

  Deriving fair stock price based on target P/E multiple — a relative valuation method.

  Nomura applied a 35x P/E multiple (approximately historical average +1 standard deviation) to FY27F EPS forecast of MYR0.095 to arrive at the target price of MYR3.34. This multiple reflects institutional consensus on a reasonable valuation level balancing growth and risk.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Greatech Technology (GREATEC MK)

  Direct research coverage subject, driven by order growth across data centers, EV, solar, and other businesses

  Strengths

  Data center orders exceed 50% of backlog and growing strongly; diversified business lines (EV/solar/semiconductors/life sciences) mitigate risk; clear and proactive management order targets

  Weaknesses

  Q1 2026 core profit down 54.3% y/y; low margin profile (net margin 9.8%); rising labor costs weighing on FY26F earnings

  Risks

  Key customer attrition, slower-than-expected new customer acquisition, raw material price volatility, USD/MYR exchange rate fluctuations

Key data

• Backlog (as of 2026-05-19)MYR 1.7bnSignificant increase from MYR1bn as of February 2026; ~MYR846mn newly added
• Q1 2026 RevenueMYR 179mnUp 4.8% q/q and 2.1% y/y
• Q1 2026 Core ProfitMYR 17.6mnDown 5.1% q/q and 54.3% y/y
• FY27F EPS Forecast ChangeRaised by 26%From previous to revised forecast, reflecting management’s optimistic backlog outlook
• Target PriceMYR 3.34Previous MYR2.27; based on FY27F P/E of 35x (+1SD)
• Current Share PriceMYR 2.74Closing price as of May 25, 2026
• Implied UpsideApprox. 22%Calculated from target price vs. current share price
• Data Center New Order Target (FY2026)MYR 100–200mnManagement’s stated new order target for data centers
• Life Sciences New Order Target (FY2026/27)MYR 300–400mn10 of 15 targeted customers already secured

Impact & implications

The report concludes that robust data center order growth is the primary catalyst for Greatech’s earnings expansion over the next two to three years. Additional growth levers include delivery of the solar perovskite prototype, EV customer expansion, and life sciences order targets. Management’s upbeat guidance underpins Nomura’s high-growth expectations for FY27F and FY28F. However, rising labor costs are pressuring FY26F profitability. From a valuation perspective, the current ~29x FY27F P/E remains below the target 35x P/E, suggesting further re-rating potential.

Risks

• Key customer attrition
• Slower-than-expected new customer acquisition
• Raw material price volatility
• USD/MYR exchange rate fluctuations

What to watch

• Achievement of MYR2bn backlog target by end-2026
• Progress on solar perovskite prototype delivery and timeline for U.S. client project
• Project wins in new markets (e.g., Slovakia) for data center business
• EV customer expansion and execution of prototype line order
• Progress toward life sciences new order target (MYR300–400mn)
• Impact of labor cost changes on profitability