GEORGE TOWN (Oct 26): PIE Industrial Bhd (KL:PIE) is banking on growing demand for artificial intelligence (AI) servers and higher production volumes to drive an earnings recovery in the second half of its financial year ending Dec 31, 2026 (FY2026), with full-year performance expected to improve from FY2025.
Group managing director Kevin Che Kian Yeap told The Edge that stronger business volumes, higher revenue contributions and improved cost management would support the recovery.
The group's near-term growth prospects are increasingly tied to its server-related business, with server system assembly operations expected to contribute progressively from the fourth quarter of 2026.
Opportunities in the segment are currently driven largely by customers from China, as the group seeks to capitalise on growing demand for AI infrastructure and the broader China-plus-one manufacturing strategy.
Che said telecommunications equipment and AI servers would be key growth drivers for the group's electronic manufacturing services business in 2026 and 2027.
The group is also expanding its focus on switches and drones, while developing its capabilities in robotics. However, robotics remains a longer-term opportunity as PIE Industrial continues to build the technological and manufacturing expertise needed for commercialisation.
Separately, the group expects utilisation of Plant 5, which has a production floor space of 100,000 sq ft, to reach about 70% by year-end, supported by higher business volumes and an ongoing production ramp-up.
PIE Industrial returned to profitability in the second quarter ended June 30, 2026, following two consecutive quarterly losses. However, it recorded a net loss of RM1.95 million for the first half of FY2026, on revenue of RM322.6 million.
For FY2025, the group posted a net profit of RM22.6 million on revenue of RM879.2 million, during a year in which a major customer was affected by US tariffs.
Its existing box-build projects span consumer electronics, industrial control, automotive, switches and servers. Server-related projects are expected to contribute a larger share of revenue and become a key growth driver.
Over the coming year, Che said, PIE Industrial plans to strengthen its manufacturing capabilities, expand its presence in higher-value electronics manufacturing and pursue new customer opportunities to broaden its revenue base.
While AI servers and server system assembly offer a more immediate growth opportunity, the sustainability of the group's earnings recovery will depend on customer demand, the pace of production ramp-up and its ability to convert new business opportunities into revenue.
PIE Industrial shares rose 2% to close at RM1.53 a share, giving the group a market capitalisation of RM587.6 million. The stock has fallen about 42% year to date.