ViTrox outlook remains robust on global AI server demand

PETALING JAYA: ViTrox Corp Bhd’s earnings prospects are underpinned by robust demand, driven by continued capacity expansion among major artificial intelligence (AI) server electronics manufacturing services players (particularly in the West), expanding into new geographies as customers diversify their supply chains.

Hong Leong Investment Bank (HLIB) Research views this as a structural, multi- year driver for ViTrox’s inspection solutions.

“ViTrox is positioning itself ahead of this, with its capital expenditure for the first nine months of 2026 (9M26) nearly tripling year-on-year to RM64mil and inventories building up to RM528mil to secure critical components,” the research house said in a recent report.

“ViTrox’s third quarter of financial year 2026 (3Q26) earnings of RM119mil came in slightly above the top end of its preview range, taking the 9M26 figure to RM262mil, or 76% and 83% of the research house’s and consensus full-year forecasts, respectively.”

“The beat was revenue-led. Sales of RM485mil cleared the top end of our RM410mil to RM450mil range on stronger- than-expected machine vision system (MVS) shipments. One-off adjustments in 3Q26 comprised mainly net inventory write-downs (plus RM1.4mil), net forex gains (minus RM0.5mil) and fair value gains on financial instruments (minus RM0.3mil),” the research house said.

HLIB Research raised its financial year 2026 (FY26) to FY28 earnings forecasts for ViTrox by 5%, 4% and 3%, respectively, on higher sales assumptions for the MVS segments.

It maintained a “buy” call on ViTrox with a higher target price (TP) of RM12 a share pegged to an unchanged 45 times mid-2028 price-to-earnings ratio (PE).

The research house said while a 45 times PE multiple is “undeniably rich” amid the current market volatility, it views the premium as warranted by ViTrox’s superior earnings growth and visibility relative to peers, with its expected FBM KLCI-50 inclusion an added support.

Meanwhile, Apex Research said ViTrox’s receivables increased 82.6% year-to-date to RM684mil and inventories rose 76.5% to RM528mil, both outpacing the 67% hike in quarterly revenue from 4Q25 to 3Q26.

“The resulting RM288.9mil working capital outflow, partly funded by higher payables (plus RM213mil), turned 9M26 operating cash flow negative at minus RM8.5mil (9M25: plus RM101.5mil) and lowered net cash to RM206.8mil (end-FY25: RM316.6mil).

“We view the build-up as largely a function of the shipment ramp rather than a sign of weakening collections, with contract liabilities more than doubling to RM73.3mil, pointing to a firm order pipeline.”

Apex Research expects sustained AI data centre investment, accelerating edge AI device demand, and the group’s continued push into advanced packaging and HBM inspection solutions to support further earnings growth into FY27, with ViTrox’s MIDA pioneer incentive (effective through September 2030) keeping the effective tax rate below the statutory rate.

“Management anticipates a favourable operating environment for the remainder of FY26 and into 2027, though it remains mindful of foreign-exchange volatility and geopolitical risks to the semiconductor supply chain,” the research house said.

Apex Research maintained a “buy” call on ViTrox with a higher TP of RM14.44 a share from RM11.12 previously, based on the five-year historical mean PE of 54.67 times applied to rolled over FY28 earnings per share of 26.4 sen.

BIMB Research expects 4Q26 to be Vitrox’s strongest quarter of the year, in line with its historical seasonality. It projects the group’s order intake should remain robust as the research house sees no visible signs of a slowdown in AI-related spending by major technology companies.

“This should translate into stronger machine shipments and revenue recognition in the coming quarter.

“Given the healthy order pipeline, earnings risk appears skewed to the upside should deliveries materialise faster than anticipated. This, together with the prospect of further earnings upgrades, could serve as a key share price catalyst and enable Vitrox to outperform despite softer sentiment towards global technology stocks,” the research house said.

BIMB Research upgraded its call for ViTrox to a “buy” from “hold”, with a higher TP of RM11.80 per share (from RM10.30) pegged to an unchanged 50 times FY27 PE.