SECURE – Temporary hiccup; to recover in 2H26F

Although SECURE reported weak 2Q26 results, this was primarily due to project delays caused by war-related uncertainty. With these projects expected to resume in 3Q-4Q26F, we expect earnings to recover in 2H26F. Since 1H26 earnings accounted for 35.3% of our previous full-year forecast, we have trimmed our 2026F earnings estimate by 8.5% to Bt124mn (+1.7% YoY). However, we maintain our OUTPERFORM rating, as earnings have likely bottomed out and we expect a solid dividend yield of 8.1% for 2026F. We revise our TP to Bt15.5 from Bt16, based on a 12x mid-2027F PE.

Recap 2Q26 results. SECURE reported a net profit of Bt13mn, down 59.1% YoY and 62.5% QoQ. These declines were mainly because customers delayed investments due to war uncertainty. The QoQ drop was also affected by seasonal factors from many holidays in 2Q26. Total revenue was Bt195.2mn, down 32.8% YoY and 36.5% QoQ. The biggest drop was in the enterprise sector, but financial and government customers showed good momentum. Gross margin fell to 19.6% from 22.5% in 2Q25 and 22.1% in 1Q26, in line with the lower revenue.

Earnings to recovery in 2H26F. We spoke with management about the weak 2Q26 results and the 2H26F outlook. Management stated that the drop in 2Q26 earnings was mainly due to delayed projects, not lost business. These delayed projects are expected to resume in 3Q-4Q26F. As a result, the company expects its 2026F performance to be in line with or better than 2025. On price competition, management noted that cybersecurity is safe from heavy price wars because enterprise clients value service quality and technical support over low costs. Rather than hurting the business, AI is expected to create more demand for cybersecurity. AI-powered hacking tools speed up the discovery of weak points, which requires faster and more advanced defenses. Furthermore, the company is unaffected by global hardware chip shortages because its security software is mostly subscription-based or cloud-based.

Maintain OUTPERFORM ,but revised down our 2026F forecast. Since 1H26 earnings accounted for 35.3% of our previous forecast, we lowered our 2026F earnings by 8.5% to Bt124mn (+1.7% YoY). We maintain our OUTPERFORM rating but lower our TP to Bt15.5 from Bt16, based on a 12x mid-2027F PE. We believe earnings passed the bottom in 2Q26 and expect to see a recovery from 3Q26F onwards. Additionally, its dividend yield remains decent at 8.1% for 2026F based on our new forecast.

Risks and concerns. Key risks to monitor are the pace of economic recovery and geopolitical uncertainty, which may impact revenue growth and cause project delays, as well as the fluctuation of the Baht against the US$, which could negatively impact gross profit margins if the Baht weakens quickly.