
OSK's momentum to rebound across key segments
PETALING JAYA: OSK Holdings Bhd 's performance is expected to accelerate meaningfully in the coming quarters, driven by broad-based recovery and strong order pipelines across its core businesses.
Hong Leong Investment Bank (HLIB) Research said OSK reported a core profit after tax and minority interests (patami) of RM125.4mil in the first quarter of financial year 2025 (1Q25).
The research house noted that the results were within its expectation, making up 22% of its full-year forecast.
On a year-on-year (y-o-y) basis, OSK's pre-tax profit was flattish at minus 0.6%.
HLIB Research said the lower contribution from the property development segment attributed to lower profit margin from existing projects compared to 1Q24.
'The decline in industries was due to operating expenses tied to newly acquired factories in Johor Baru, which reported pre-tax profit of minus RM6.3mil.
'Excluding the losses, the segment would have recorded a pre-tax profit improvement of 18.6%, in tandem with the higher sales volume.
'Overall, core patami increased slightly by 2.1% due to lower taxes,' the research house said in a report yesterday.
The group's capital financing division recorded 1Q25 pre-tax profit of RM30.9mil, which was up by 18.2% y-o-y.
The positive performance was supported by the strong loan growth across all segments from conventional, civil servant and Australia.
'Loan portfolio continues to show robust momentum, growing sizeably to RM2.43bil as at March 31, 2025, which was up by 11.3% quarter-on-quarter (q-o-q).
'The q-o-q loan growth was supported by all segments: conventional (up 11.3%), civil servant financing ( up 4.8%), Australia (up 11.3%),' HLIB Research said.
The research house said on the current trajectory, the capital financing segment is poised to deliver record-high earnings in financial year 2025 and is likely to emerge as a key earnings driver, on par with the group's property segment.
Meanwhile, property sales were impacted in 1Q25 as both Chinese New Year and Hari Raya fell within the same period, resulting in fewer working days and temporary disruption in transaction activity.
'That said, momentum is expected to rebound, supported by a robust portfolio of ongoing projects and an active launch pipeline slated for the coming quarters,' HLIB Research said.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Star
a day ago
- The Star
Pavilion-REIT forecast to continue solid showing
HLIB Research said the outlook for Pavilion-REIT for financial year 2025 remains positive. PETALING JAYA: Analysts expect stronger earnings for Pavilion Real Estate Investment Trust 's (Pavilion-REIT) in the second half of this year (2H25) as the group's growth continues to gain momentum. The group reported its second quarter of financial year 2025 (2Q25) core net profit of RM78.7mil earlier this week, down 13% quarter-on-quarter and up 17.2% year-on-year, bringing 1H25's total to RM169.1mil, which was in line with most consensus expectations. Hong Leong Investment Bank Research (HLIB Research) said in a report the outlook for Pavilion-REIT for financial year 2025 (FY25) remains positive, underpinned by sustained tourism-driven footfall at key malls such as Pavilion Kuala Lumpur and Pavilion Elite, which contributed about 67% of 1H25 revenue. 'This, along with management's low to mid-single-digit rental revision guidance, supports our view of a resilient FY25 performance,' it added. HLIB Research noted that Pavilion-REIT's management had observed a notable increase in tourist footfall at Pavilion KL and Pavilion Elite over the past two to three weeks. 'This aligns with our 2H25 outlook, where we expect sustained high footfall at these prime malls supported by Visit Malaysia 2026 initiatives and the mutual visa exemption between Malaysia and China,' the research house said. HLIB Research, which maintained a 'buy' call on the stock with an unchanged target price of RM1.77, said it remains positive on the REIT, underpinned by a favourable tourism outlook, which is expected to boost footfall and spending in key assets like Pavilion KL and Pavilion Elite, reinforcing its growth momentum. CGS International Research (CGSI Research) said it continues to see Pavilion-REIT as a proxy for growing private consumption, an uptick in tourism and accelerated earnings expansion from Pavilion Bukit Jalil (PBJ). The research house said the group is expected to post higher 2H25 earnings backed improving occupancy and earnings from PBJ, incremental contributions from the newly acquired Banyan Tree Kuala Lumpur hotel and Pavilion Hotel Kuala Lumpur as well interest savings following the overnight policy rate cut on July 9. On key takeaways from Pavilion-REIT's 2Q25 briefing earlier this week, CGSI Research said management highlighted that PBJ's valuation has been maintained at RM2.2bil following a recent revaluation exercise by consultants Knight Frank and KPMG. Therefore, the outstanding acquisition consideration remains unchanged at RM400mil (with RM1.8bil already paid), which is due next month. 'We believe this could lead to a modest increase in gearing, as it draws down additional debt to fund the remaining consideration,' the research house said. CGSI Research reiterated an 'add' call on the REIT with a target price of RM1.79 per share. RHB Research, meanwhile, kept a 'buy' call with a new target price of RM2 per share. It said Pavilion-REIT's 1H25 results were in line with expectations and supported by the solid performance of PBJ. According to the research house, Pavilion REIT's stands to benefit from its robust asset quality, the recovery in tourism, and exposure to floating-rate debt (88%), which makes it a beneficiary of recent interest rate cuts. On the REIT's outlook, RHB Research said it expects 3Q25 retail sales to remain soft, due to the absence of festival-related spending, before picking up in the seasonally stronger 4Q25.


New Straits Times
2 days ago
- New Straits Times
Maybank IB: Construction, healthcare, O&G among 2025 bright spots
KUALA LUMPUR: While most sectors are expected to deliver flattish earnings in the second quarter of 2025 (2Q25), Maybank Investment Bank Bhd (Maybank IB) said it anticipates positive momentum in the construction, healthcare, property, oil and gas (O&G), and utilities sectors. "Macro data released year-to-date suggests that domestic tailwinds, namely resilient consumer spending and sustained investment upcycle, are countering external headwinds. "The 2Q25 results season has just begun, and we are expecting a more balanced quarter after an underwhelming first quarter (1Q25)," the investment bank said in a note today. In the construction sector, Maybank IB noted that 1Q25 was seasonally slower due to the dual impact of the Chinese New Year and the fasting month of Ramadhan, both of which fell during the quarter. "For 2Q25, we expect works and thus, progress billings to accelerate. This will lead to more revenue and profit recognised in 2Q25," it said. The investment bank also expects a rebound in the healthcare and property sectors following a seasonally weaker performance in 1Q25. As for O&G, Maybank IB said earnings for oil and gas services and equipment players in 2Q25 are likely to improve quarter-on-quarter, as the sector moves beyond the annual monsoon season, which typically affects the fourth and first quarters.


The Star
2 days ago
- The Star
Deposit costs to buoy Affin Bank
HLIB Research said Affin's loan pipeline remains robust at about RM9bil. PETALING JAYA: Affin Bank Bhd 's net interest income (NIM) is expected to remain resilient in the lender's upcoming second quarter (2Q25) earnings announcement, analysts say. Affin's NIM is expected to be underpinned by a solid loan base, said Hong Leong Investment Bank Research (HLIB Research). Despite some churn, the research house said Affin's loan pipeline remains robust at about RM9bil. 'Concurrently, 2Q25 NIM is expected to remain stable sequentially as proactive cost of funds optimisation efforts are set to largely offset any asset yield pressure from loan competition. 'Meanwhile, with the yields for 10-year Malaysian Government Securities currently still below 3.5%, there's significant room for Affin to capitalise on favourable trading opportunities,' HLIB Research said in a report. HLIB Research also expects the bank's gross credit cost to remain stable, supported by steady asset quality. Additionally, improved recovery momentum should help keep net credit costs within single digits for this financial year (FY25). 'We maintain our 'buy' rating on Affin, with an unchanged target price of RM3, implying a 0.60 time FY26 price-to-book value. 'We believe the bank is on the cusp of a notable enhancement in profitability, primarily driven by a fundamental shift in its funding mix, alongside a robust loan pipeline and enhanced operational efficiencies, which are set to drive return on equity.' The research house said while sector-wide asset yields have gradually declined, Affin's primary challenge and significant opportunity lie in managing its cost of deposits. It said liquidity following the cut in the Statutory Reserve Requirement could partially offset the impact of the recent 25 basis points (bps) cut in the overnight policy rate (OPR) . Deposit competition is easing and Affin is expected to benefit from an increase in low-cost current account and savings account deposits, driven by inflows from Sarawak, the bank's major shareholder. This is estimated at around RM130mil per month by 3Q25. According to HLIB Research, this allows the bank to shift from costly promotional rates for deposits to lower-cost payroll-based accounts, helping build a more stable and cheaper funding base. 'Interestingly, our tracker on retail fixed deposit (FD) promotional rates showed that after the 25bps OPR cut on July 9, Affin aggressively slashed its FD promotional rates by between 35bps and 50bps, whereas peers only cut up to 25bps. 'This steeper reduction suggests a deliberate strategy, likely driven by the anticipation of cheaper funding sources coming online, which enables Affin to reduce reliance on higher-cost deposits,' the research house said.