Malacca Securities Sdn Bhd has initiated coverage on Main Market-bound Stratus Global Holdings Bhd with a fair value of RM2 per share, representing a 150% upside from its IPO price of 80 sen, citing the group’s expansion strategy, robust semiconductor industry prospects and healthy earnings visibility.
The research house said the automated material handling system solutions provider stands to benefit from the global artificial intelligence-led semiconductor boom, supported by plans to more than double its production capacity through a RM122.6 million investment in a new manufacturing facility in Bayan Lepas. The additional capacity is expected to remove production bottlenecks and support a growing pipeline of orders when operations commence in 2028.
Malacca Securities also expects Stratus Global to accelerate its international growth by establishing sales and engineering support offices in Japan, Taiwan, Germany and the US over the next three years. The strategy builds on its growing overseas exposure, with North America and Europe contributing 81.8% of FY26 revenue.
The group is also expanding into the back-end semiconductor automation market, where demand is rising as chipmakers automate assembly and testing processes to improve productivity and support advanced packaging. Combined with an unbilled order book of RM108.4 million, Stratus Global has clear revenue visibility over the next two financial years, the research house noted.
Despite a 10.5% decline in FY26 revenue to RM197.1 million and a 22.8% drop in net profit to RM51.1 million, Malacca Securities said the group’s resilient gross profit margin of 51.8%, debt-free balance sheet and strong operating cash flow demonstrate the resilience of its business model.
The brokerage projects Stratus Global to deliver a three-year earnings CAGR of 12.5%, with growth driven by the semiconductor upcycle, overseas market expansion and additional production capacity.
Its RM2 target price is based on a 42.1-times FY28 forecast price-to-earnings multiple, reflecting Stratus Global’s superior profitability and return on equity compared to comparable global automation companies.
However, Malacca Securities cautioned that foreign exchange movements, customer concentration and execution risks relating to its new manufacturing facility remain the key risks to its investment thesis.
