KUALA LUMPUR (May 26): Critical Holdings Bhd (KL:CHB) fell nearly 17% on Tuesday after the mechanical-and-electrical engineering firm’s recently-ended quarter trailed analysts’ estimates.

Reported net income accounted for less than half of the consensus forecast with just three months left in its financial year, prompting cuts to estimates. Still, research houses are bullish on the stock, betting that earnings will pick up in the coming quarters.

“We believe the weaker earnings performance is largely timing-related rather than structural in nature”, particularly as Jan-March was a shortened working quarter, said Maybank Investment Bank.

Shares of Critical Holdings lost as much as 17.5 sen to 83.5 sen. The stock was trading at 88 sen at 9.40am as more than two million shares changed hands. The company’s market capitalisation stood at RM327 million based on the last price.

Before Tuesday’s decline, the stock has gained nearly 77% from its lows on April 6, as investors bet that the company will get more jobs from semiconductor and data centre clients that are now seeing a boom.

The consensus is still unanimously bullish with all four research houses recommending ‘buy’ on Critical Holdings. The average target price is RM1.32, according to Bloomberg, implying a potential upside of 57% in the next 12 months from its last price.

While FY2026 could turn out to be a “blip” for Critical Holdings, the company is expected “to resume its growth trajectory and deliver a strong year of earnings” in the next financial year thanks to its record-high order book, said Phillip Capital.

Critical Holdings’ unbilled order book climbed to a record high of RM307 million, and prospects for further job wins remain strong with up to RM500 million worth of tender outcomes expected before the end of FY2026, the research house added.