Engtex Group Bhd could be poised for a technical breakout towards RM0.465–RM0.515, supported by improving earnings momentum, recovering steel demand and growing opportunities in water infrastructure projects, according to Hong Leong Investment Bank (HLIB) Research.
In its latest technical and fundamental assessment, HLIB said Engtex had staged a mild rebound to close at RM0.445 after retreating from its year-to-date high of RM0.59 to a low of RM0.39.
The research house said the stock was forming a higher-low pattern after reclaiming its short-term moving averages and moving above the 23.6% Fibonacci retracement level, signalling a potential symmetrical triangle breakout.
A decisive move above RM0.465 could open the way towards RM0.49 and RM0.515, corresponding to the 50% and 61.8% Fibonacci retracement levels, respectively.
On the downside, HLIB identified support at RM0.43, followed by RM0.415 and RM0.39, with a cut-loss level at RM0.41.
HLIB said Engtex’s improving financial performance strengthened the fundamental case for the stock.
The group recorded second-quarter 2026 revenue of RM373.4 million, up 15.8% quarter-on-quarter and 8.5% year-on-year.
Net profit rose 30% quarter-on-quarter and more than 300% year-on-year to RM12.1 million, lifting first-half earnings to RM21.3 million, an increase of more than 600% from a year earlier.
The stronger results were driven by recovering steel demand and lower unit costs following higher production and delivery volumes.
HLIB expects the earnings recovery to continue into the second half of 2026, supported by cost optimisation and a more favourable product mix featuring higher-margin steel products.
The research house highlighted Engtex’s approximately RM2 billion tender pipeline, which could progressively translate into new contracts as Malaysia accelerates non-revenue water reduction programmes and upgrades its water infrastructure.
Demand for water pipes is also expected to benefit from data centre expansion, with HLIB citing 8.35 gigawatts of approved electricity supply agreements and a further 5GW in the pipeline.
The growth of data centre operations could increase demand for water capacity expansion and pipe replacement, supporting longer-term demand for Engtex’s core products.
HLIB noted that Engtex was trading at 5.9 times forecast FY2027 earnings, below its five-year mean of 39.4 times, as the group’s earnings recovery and exposure to water infrastructure investment underpin its medium- to long-term outlook.
