KUALA LUMPUR (Nov 24): EG Industries Bhd's (KL:EG) stock price could jump more than 50% with a robust demand outlook and strong earnings growth potential, according to Tradeview Research.
Earnings could expand 22% to 43% between 2026 and 2028, driven by optical modules and network switches, onboarding of new customers, and improvement in margins with a favourable product mix, the research house said in initiating a ‘buy’ call on the electronic manufacturing services firm.
“Rising trade and geopolitical tensions are driving global companies to diversify supply chains, leading to increased investment in Malaysia,” Tradeview said. “EG stands to benefit from this trend.”
Tradeview’s target price for EG is RM1.84, which values the stock at 16 times its forward earnings and brings it in line with its peers' average as well as with its own five-year historical multiples.
Shares of EG, which also offers assembly services from printed circuit board to box build, have rebounded more than 40% from their April lows during the global tariff turmoil. The company has ventured into higher-value upstream component manufacturing since 2024.
Rakuten Trade is the only other research house covering EG, with a ‘buy’ call and target price of RM1.40. EG was unchanged at RM1.22 at the time of writing on Monday.
A contract with Cambridge Industries Group to manufacture 5G optical modules and transceivers is boosting profit margins, Tradeview said, noting that the business could also position EG to tap into robust demand from the fast-growing telecom, data centre, and artificial intelligence sectors.
Margins will also be supported by rising in-house manufacturing of upstream components with growing orders from both existing product lines and new customer projects, Tradeview said.
“We see minimal impact from the semiconductor tariff, as most end customers have US plants exempt from it or not finished items,” the research house added.
Tradeview is forecasting a net profit of RM104.5 million for the financial year ending June 2026 on revenue of RM1.94 billion.