Maybank, CIMB Expect Improving Orders At VS Industry; HLIB Stays Cautious

KUALA LUMPUR, Dec 5 (Bernama) -- Two research firms expect order flows at VS Industry Bhd to improve over the coming quarters despite a weaker first-quarter performance, while another has maintained a cautious view due to softer customer demand and margin pressure.

In a research note, Maybank Investment Bank Bhd (Maybank IB) upgraded the stock to ‘Buy’, saying the latest quarter was largely within expectations and recovery prospects appear intact.

“We expect order flows to gradually improve, although US dollar weakness could potentially drag earnings,” it said. 

The bank maintained its target price at 61 sen.

Maybank IB also said VS’ first quarter of 2026 (1Q 2026) revenue fell 3 per cent year-on-year to RM1.1 billion due to softer orders from key markets.

“Revenue in Malaysia was broadly stable, rising 0.2 per cent year-on-year, while Indonesia posted a sharper 31 per cent decline.

“As per VS’ reporting adjustments, contributions from Singapore and the Philippines are now consolidated under the Malaysia segment,” it said. 

Maybank IB said the earnings before interest and taxes margin rose 0.3 percentage points to 4.7 per cent, helped by cost efficiencies despite higher expenses in the Philippines.

It added that key risks include softer consumer demand, customer attrition, margin pressure from start-up and productivity inefficiencies, and foreign exchange volatility.

CIMB Securities Sdn Bhd also upgraded VS Industry to ‘Buy’, citing contributions from new manufacturing programmes. 

“We think VSI is at a key inflection point, supported by gradual improvement in the operating efficiency of its Philippines operations and potential new wins from Customer X,” it said. 

The bank lifted its target price to 66 sen from 64 sen.

Meanwhile, Hong Leong Investment Bank Bhd (HLIB) maintained its ‘Hold’ recommendation, highlighting weaker-than-expected topline performance and cost-down requests from brand owners.

“VS started FY26 on a lukewarm note, with 1Q 2026 core profit after tax and minority interest of RM28.0 million, below both our and consensus expectations,” HLIB said.

It said the performance reflected weaker-than-expected topline performance and noted that cost adjustments may lead to further recalibration in market expectations.

HLIB cut its profit forecasts for the financial years 2026 and 2027 by 7.0 per cent and 8.5 per cent, and lowered its target price to 49 sen.

-- BERNAMA