KUALA LUMPUR (March 3): Shares of NationGate Holdings Bhd (KL:NATGATE) succumbed to panic selling and closed at limit-down levels on Monday, following news reports that three men were charged with fraud in Singapore over alleged movement of Nvidia chips.

Singapore is reportedly investigating if Dell and Super Micro servers shipped to Malaysia housed banned Nvidia chips, highlighting the role of middlemen in funnelling high-end semiconductors.

NationGate’s share price plunged 55 sen or 29.7% to RM1.30, erasing all gains made since December 2023. Trading volume reached 48.85 million, being one of the most actively traded stocks on Bursa.

At RM1.30, the company was valued at RM2.96 billion, with a trailing 12-month price-earnings ratio of 18.47 times.

NationGate co-founder and managing director Datuk Ooi Eng Leong told The Edge that the court case was associated with a company that is an Nvidia Cloud Partner (NCP) and has nothing to do with NationGate.

“We are a manufacturer for Nvidia. NCP is one of the end-users; they are not our customers," he explained.

Last Thursday (February 27), NationGate reported record-high net profit and revenue for the fourth quarter ended Dec 31, 2024 (4QFY2024), boosted by its data computing segment associated with the assembly of artificial intelligence (AI) servers for Nvidia.

Quarterly net profit jumped four times to RM64.06 million from RM15.92 million in 4QFY2023, as revenue surged nearly 18 times to RM3.03 billion from RM171.58 million a year ago.

For the full FY2024, the group’s net profit jumped 2.6 times to RM160.19 million from RM60.81 million, as revenue jumped more than eight times to RM5.27 billion from RM638.3 million.

Following the strong earnings, two research firms, Kenanga Investment Bank and UOB Kay Hian, upgraded their recommendations from “hold” to “buy” and revised their target prices (TPs) higher. UOB increased its TP to RM2.33 from RM2.10, while Kenanga revised upward its TP to RM2.21 from RM2.15.

In total, there are currently five “buys” and one “hold” on NationGate, with an average target price of RM2.66. These target prices range from Affin Hwang Investment Bank's RM2.12 to Macquarie's RM4.00.

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