PETALING JAYA: The technology sector’s upward earnings momentum is expected to continue into the second half, backed by healthy backlogs, high loadings, steady project execution and accelerating billings amid the industry upcycle.
Following a seasonally strong second quarter of financial year 2026 (2Q26) for the sector, RHB Research said it sees greater upside among “laggards and second-tier names” which have yet to see earnings recovery and operational improvements fully reflected in valuations.
It kept its “overweight” stance on the technology sector, citing the healthy supply chain order flows amid the artificial intelligence infrastructure buildout, improving earnings growth trajectory, and positive management guidance.
This comes after encouraging overall 2Q26 results, with most companies performing within expectations and eight of 12 reporting in-line earnings.
The two electronic manufacturing services (EMS) players, however, fell short of estimates due to weaker-than-expected revenue and margins, reflecting unfavourable product mix and higher input costs. Weaker EMS player results weighed on sector core profit after tax and minority interest, which declined by 25.8% year-on-year but rose 206% quarter-on-quarter as stronger loadings started to reflect in earnings.
RHB Research named Malaysian Pacific Industries
Bhd among its top sector picks, with a target price (TP) of RM55.80 per share, Pentamaster Corp Bhd (TP: RM6.32), and CTOS Digital Bhd (TP: RM1.11).
It also upgraded Inari Amertron Bhd to a “buy” recommendation after its outperformance in 2Q26.
