PETALING JAYA: Electronics manufacturing services (EMS) provider VS Industry Bhd

’s outlook continues to be challenging, as weak consumer demand has led to fewer orders from customers, with prospects for a gradual recovery not a certainty.

Analysts covering the stock remain divided, with several of them projecting that the worst may be over for the company, which posted a net loss of RM33mil compared to a net profit of RM24mil on revenue that fell 11.6% to RM804mil for the third quarter ended April 30, 2026 (3Q26) results compared to 3Q25.

Analysts positive on the outlook point to improving plant utilisation in the company’s Philippines plant to achieve breakeven, cost-sharing with customers in response to tariffs for higher orders and the intense competition on price leading to industry consolidation as beneficial to the company.

CIMB Securities has upgraded the stock to a “hold” call from “reduce” and lifted the target price (TP) to 21 sen from 16 sen.

It expects a 10% revenue growth momentum on a quarter-on-quarter basis as the company heads into a stronger demand season in 4Q26 and 1Q27 on year-end shopping demand.

“Our rating upgrade is premised on improved near-term profitability prospects and stronger seasonal demand,” it said, but remains cautious on the medium-term outlook given uncertain consumer spending and persistent inflationary pressures from the Middle East conflict.

RHB Research expects a gradual earnings recovery from 4Q26 onwards on seasonal demand and stronger demand from customers. It has maintained a “buy” call but revised the TP lower to 31 sen from 45 sen.

“VS Industry’s healthy balance sheet positions it well to capture market share amidst a period of industry consolidation,” it said, noting that 3Q26 results were mainly due to weaker key customer orders amid softer consumer demand and margin compression from under-utilised plants.

Hong Leong Investment Bank Research, which has maintained a “sell” call and lowered the TP to 12 sen from 13 sen, doubts a gradual recovery of orders from a major customer as consumer demand remains soft amid the Middle East conflict, noting that May 2026 deliveries this customer has with a competitor has been pushed back.

It said this major customer’s order flow remains the key swing factor for the company’s earnings, especially in Malaysia.

The research house has cut financial year ending July 31, 2026 (FY26) to a loss of RM49.4mil while projecting FY27 earnings of RM49.1mil and FY28 earnings of RM70.6mil after lower sales growth assumptions from the major customer.

UOB Kay Hian Research, while maintaining a “buy” call, has revised the TP to 34 sen from 43 sen, as near-term outlook remains murky amid uncertain consumer demand but noted that a decade-low share price valuation offers value on a rebound from positive news.

It shared that the company’s management believes that prevailing industry headwinds and tariff-related pressures would continue to weigh on profitability at least through FY26.

It added that the company has adopted the strategic decision to partially share the tariff cost burden with customers in exchange for higher order volumes.

“While this will continue to lead to near-term margin compression, the current low-margin landscape is also driving a natural industry shake-out, accelerating a survival-of-the-fittest phase where weaker players are exiting the market, creating opportunities for market share consolidation by established and resilient players such as VS Industry,” it added.