Strong Data Center Business Leads Nomura to Raise Target Price to MYR 3.34

Overview

This report provides Nomura Securities' commentary on Malaysian automation services provider Greatech Technology's (GREA.KL) Q1 2026 results. Despite a significant year-over-year decline in core profit due to higher labor costs from recent acquisitions, robust growth in the data center segment and strong new order intake offset weakness in other business areas. The company’s order book has rapidly climbed to MYR 1.7 billion, and management remains confident in achieving its full-year order targets. Based on this, Nomura maintains its 'Buy' rating and raises the target price to MYR 3.34.

Core views

The data center segment has emerged as a new growth engine. Q1 2026 revenue reached MYR 179 million, up 5% quarter-over-quarter and 2% year-over-year. This growth was primarily driven by contributions from the new data center segment and the consolidation of the newly acquired Slovak subsidiary, Greatech Mechatronics (GMS). In contrast, contributions from the electric vehicle, life sciences, and solar segments weakened. Profits faced short-term pressure, with headline net profit boosted by non-recurring gains that masked underlying core declines. Employee expenses increased by MYR 3.63 million due to the GMS acquisition, causing EBITDA margin to fall from 28.8% a year ago to 15.2%, and EBIT margin to drop from 24.6% to 10.6%. Core profit for Q1 2026 stood at MYR 17.6 million, down 5% quarter-over-quarter and 54% year-over-year, slightly below market expectations (representing 11%/10% of Nomura/Bloomberg full-year estimates). Notably, headline net profit was temporarily boosted by a one-time foreign exchange gain of MYR 9.2 million; excluding this, the underlying earnings decline would be even more pronounced. Order book surged, with clear annual targets. As of May 19, 2026, the order book stood at a record MYR 1.7 billion (up from MYR 1.0 billion on February 20), reflecting approximately MYR 846 million in new orders over the past three months. By industry, data centers accounted for the largest share (50%-55%), followed by semiconductors (10%-15%) and electric vehicles (15%-20%). Management aims to grow the order book to around MYR 2.0 billion by end-2026. Segment-specific progress includes: perovskite prototype installation expected in November at a U.S. customer site for the solar segment; 10 out of 15 targeted life sciences clients already secured; ongoing discussions with three key EV customers; and plans to secure an additional MYR 100–200 million in new data center orders in 2026, along with monitoring potential opportunities in Slovakia. Earnings forecast revisions and valuation uplift. Given higher employee costs, Nomura lowered its FY2026 EPS forecast by 7%; however, strong order visibility and future conversion potential led to a 26% upward revision in the FY2027 EPS forecast, alongside the introduction of an initial FY2028 forecast. Using a target P/E of 35x for FY2027 (+1 standard deviation above historical average), the target price was raised from MYR 2.27 to MYR 3.34, implying approximately 22% upside.

Analysis framework

Nomura’s analysis follows a framework contrasting 'short-term earnings volatility' against 'long-term order visibility.' First, by dissecting revenue and profit structures, it identifies data centers as the new growth driver, while the temporary margin compression stems from one-time integration costs (labor) related to M&A—not operational deterioration. Second, it emphasizes 'order book' as a leading indicator, validating the company’s accelerating order acquisition capability by comparing data from February and May, which justifies upward revisions to long-term earnings forecasts. Finally, valuation employs a relative P/E approach, assigning a premium multiple above historical averages to reflect the company’s positioning in the high-growth data center segment and strong order certainty.

Methodology notes

• Valuation MethodPE/PEG valuation

  Target P/E Method

  The report uses a target price-to-earnings (P/E) ratio for valuation, anchoring on a 35x P/E for FY2027 (one standard deviation above the historical mean) multiplied by the forecasted EPS to derive the target price. This method is commonly applied to high-growth technology companies to reflect market premiums for future growth expectations.

• Industry/ Sector Analysis FrameworkSupply-demand framework

  Order Book Analysis

  For B2B equipment and service providers, the order book is the most direct leading indicator of future revenue. The report tracks total order value and segment breakdown to assess revenue visibility and growth momentum over the next 1–2 years.

Asset mapping & comparison

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

• Greatech Technology (GREA.KL)

  Beneficiary: Surging demand for data center automation, strong order backlog

  Strengths

  Rapidly growing order book, data centers account for over half of orders, successful new client acquisition

  Weaknesses

  Short-term margin pressure from rising labor costs, weakening contributions from EV/solar segments

  Risks

  Loss of key clients, insufficient new client onboarding, raw material cost volatility, FX risk

Key data

• Q1 2026 RevenueMYR 179 millionUp 5% QoQ, up 2% YoY
• Q1 2026 Core ProfitMYR 17.6 millionDown 5% QoQ, down 54% YoY
• Q1 2026 EBITDA Margin15.2%Compared to 28.8% a year ago
• Order Book (as of May 19)MYR 1.7 billionUp from MYR 1.0 billion on Feb 20; ~MYR 846 million added in 3 months
• Data Center Order Share50%-55%Highest share within the order book
• FY2027 EPS Forecast Revision+26%Reflects optimistic order outlook
• New Target PriceMYR 3.34Previously MYR 2.27

Impact & implications

The report argues that although short-term margins are pressured by M&A integration costs, the explosive growth in the data center segment has established a new long-term growth trajectory for the company. The substantial MYR 1.7 billion order book provides exceptional earnings visibility for the next two years. The raised target price reflects institutional recognition of the company’s successful transition from traditional solar/EV automation to high-value data center automation, as well as confidence in its ability to convert orders into revenue.

Risks

• Loss of key clients
• Insufficient new client onboarding
• Volatility in raw material costs
• USD/MYR exchange rate fluctuations

What to watch

• Whether the order book reaches the MYR 2.0 billion target by end-2026
• Progress of perovskite prototype installation in the U.S. for the solar segment
• Ability of the data center segment to secure an additional MYR 100–200 million in new orders in 2026
• Signing status of the remaining 5 targeted life sciences clients