NationGate hits one-year high as investors look past earnings slump
KUALA LUMPUR: Shares of NationGate Holdings Bhd jumped nearly 15 per cent to a one-year high in early trade, as optimism over its optical networking business outweighed weaker quarterly earnings.
NationGate Holdings Bhd shares surged nearly 15% to a one-year high of RM1.71 in early trade, driven by optimism surrounding its optical networking business despite weaker second-quarter earnings. The company opened at RM1.52, up two percent from Monday's close, before reaching a morning high of RM1.71. As of 10:15am, the stock was trading at RM1.70, marking a 14.09% increase, with more than 67 million shares changing hands.
This activity made NationGate the most actively traded counter on Bursa Malaysia, with a market capitalization of RM3.87 billion. Year-to-date, the stock has gained nearly 87%.
However, NationGate reported a significant drop in its second-quarter net profit, falling 79.1% to RM10.90 million, down from the previous year. The decline was attributed to lower contributions from its data computing business. Despite the earnings setback, UOB Kay Hian upgraded NationGate to a Buy rating and raised its target price to RM1.88, based on a 24 times price-to-earnings ratio.
The target suggests a potential 11% gain from its current price over the next 12 months. UOB Kay Hian noted that while the company's first-half earnings fell short of expectations, it remains optimistic about improving profitability as NationGate's optical networking business moves beyond its initial phase. The firm anticipates rising volumes to boost margins as the business scales up.
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