PPB to hold steady in 2Q
This is expected to be underpinned by steady contributions from its core grains and agribusiness segment, as well as associate share of profits.
The group is slated to release its 2Q25 results by the end of August.
For 2Q25, UOB Kay Hian Research (UOBKH Research) said PPB's grain and agribusiness segment's performance is expected to remain stable despite the fluid external trade environment, supported by relatively benign weather conditions and moderate volatility in agri-commodity prices.
UOBKH Research said, in consumer products, PPB has been contending with operating costs rising at a relatively quicker rate and has been merely breaking even at the earnings before interest and tax (Ebit) level in recent quarters, despite seeing a steady uptick in revenue.
'For 2Q25, however, we expect operating margins to improve slightly, with costs of goods sold seen coming down slightly while potentially benefitting from the stronger ringgit versus the US dollar,' the research house noted.
As for the film exhibition and distribution segment, UOBKH Research expects the segment to post a positive single-digit Ebit contribution in 2Q25, aided by higher expected cinema revenue due to more releases compared with 1Q25 and on a year-on-year (y-o-y) basis.
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Stronger bottom line forecast for Northeast in second half of FY25
PETALING JAYA: Northeast Group Bhd, a manufacturer of precision mechanical components, may see stronger profits in the second half of its financial year 2025, ending Sept 30 (2H25), on the back of resilient orders from its photonics segment, analysts say. UOB Kay Hian Research (UOBKH Research) forecasts sequentially better quarters ahead for the Penang-based company, with a 2H25 core net profit ranging between RM9.5mil and RM10.5mil. The research house also raised Northeast's earnings estimates for FY26 by 24% as a result of higher order assumptions on a better product mix. 'We expect FY26 revenue and net profit to improve by 31% and 52%, respectively, on the back of a cyclical recovery and growing relevance in its customers' technological advancement.' The research house also highlighted Northeast's expansion pipelines over the next three years, which could double its capacity, and that the stock continues to enjoy a good valuation. 'Despite a 91% share price surge since April 25, Northeast's valuation remains attractive, underpinned by improved visibility from key customers' onshoring activities. 'At 18 times FY26's price-to-earnings ratio, it continues to stand out as one of the most undervalued integrated engineering solution providers,' UOBKH Research said. A resilient growth outlook, inelastic demand despite policy headwinds, and recovering momentum across key segments further strengthen the investment case for Northeast. Northeast specialises in the manufacturing of precision engineering components used in the electrical and electronics, optoelectronics, photonics, semiconductor and telecommunications industries. Its open order book stands at around RM32mil, accompanied by a replenishment rate of about RM10mil per month, underscoring robust underlying demand. In FY23, Northeast maintained decent margins despite operating at a utilisation rate of 65% to 73% and an industry downturn that saw its revenue and net profit drop by 35% and 51%, respectively, owing to high manufacturing yields and strategic portfolio exposure. Moving forward, UOBKH Research anticipates improved utilisation and a positive upside arising from the group's enhanced capabilities involving cleanroom services and the booming demand for new cellular networks. UOBKH Research has maintained its 'buy' call on Northeast with a target price of 89 sen, up from 72 sen. Northeast's shares closed at 66 sen yesterday.
The Star
2 days ago
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PPB to hold steady in 2Q
PETALING JAYA: PPB Group Bhd is expected to post flattish earnings quarter-on-quarter (q-o-q) at between RM340mil and RM370mil for the second quarter of this year (2Q25). This is expected to be underpinned by steady contributions from its core grains and agribusiness segment, as well as associate share of profits. The group is slated to release its 2Q25 results by the end of August. For 2Q25, UOB Kay Hian Research (UOBKH Research) said PPB's grain and agribusiness segment's performance is expected to remain stable despite the fluid external trade environment, supported by relatively benign weather conditions and moderate volatility in agri-commodity prices. UOBKH Research said, in consumer products, PPB has been contending with operating costs rising at a relatively quicker rate and has been merely breaking even at the earnings before interest and tax (Ebit) level in recent quarters, despite seeing a steady uptick in revenue. 'For 2Q25, however, we expect operating margins to improve slightly, with costs of goods sold seen coming down slightly while potentially benefitting from the stronger ringgit versus the US dollar,' the research house noted. As for the film exhibition and distribution segment, UOBKH Research expects the segment to post a positive single-digit Ebit contribution in 2Q25, aided by higher expected cinema revenue due to more releases compared with 1Q25 and on a year-on-year (y-o-y) basis.
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Long-term growth prospects of Sunway poised to remain positive
PETALING JAYA: Sunway Bhd remains supported by near-term catalysts from stronger-than-expected construction wins, conversion of land in Johor to freehold status and healthcare listing in early 2026. UOB KayHian Research (UOBKH Research) said, in the longer term, the property development segment is backed by strong sales from phased launches, strategic landbanking, and exposure to the Johor-Singapore Special Economic Zone (JS-SEZ). 'These collectively offer defensive qualities in the face of rising geopolitical tensions,' the research house said in a report recently. Last week, a joint venture (JV) between Sunway and Singapore's Sing Holdings Residential Pte Ltd (SHRPL) secured a 99-year leasehold residential site at Chuan Grove, Singapore for S$703.6mil (RM2.33bil), following a successful tender awarded by the Urban Redevelopment Authority of Singapore. Located near Lorong Chuan MRT Station on the Circle Line, the site enjoys good accessibility and is close to schools and major expressways. The high-rise project comprises three towers with about 550 units and is expected to be developed over 60 months or earlier, with a launch target in the second half next year (2H26). SHRPL and Sunway Developments Pte Ltd (SDPL) will incorporate a JV company, in which SHRPL and SDPL will have equity interest in the proportion of 65:35 at a later date, to undertake the development of the land. SDPL is a wholly owned subsidiary of Sunway Holdings Sdn Bhd, which in turn is a wholly owned subsidiary of Sunway. UOBKH Research said while the gross development value (GDV) is still yet to be finalised, it could fall around S$1.4bil (RM4.7bil), assuming a typical land-cost-to GDV ratio of 50%. 'We estimate the project to contribute S$10mil to S$15mil (RM33mil to RM50mil) per year, based on its 35% stake, development period of five years, and net margin of 10% to 15%, equivalent to 3% to 4% of our 2027 earnings forecast,' the research house said. UOBKH Research added that while it anticipates a moderate earnings blip in 2025 from lumpy profit recognition of Sunway's Singapore projects, the research house is positive on the long-term growth prospects. 'The positive outlook is underpinned by strong sales from phased launches, ongoing land conversion from the private lease scheme to freehold status in Medini, Johor and recent uptick in land replenishment,' UOBKH Research said. Unlike other research houses, MBSB Research maintained a 'neutral' call for Sunway with an unchanged target price of RM5.01. The research house kept its earnings forecast for financial year 2025 (FY25), FY26 and FY27, noting that net gearing is expected to increase to 0.49 times from 0.44 times in the first quarter of financial year 2025 (1Q25) after the award of land in Singapore. 'We see the listing of Sunway Healthcare Group which is expected by 1H26 to be the near-term catalyst to Sunway Bhd. 'Nevertheless, we opine that all the positives have been priced in for now,' MBSB Research said. Meanwhile, TA Research said Sunway's entry into Chuan Grove is 'well positioned to capture demand', given the site's prime location within the 'mature and established' Serangoon planning area. 'Additionally, the robust participation in the land tender, with the top four bids clustered within a 10% range, reflects broad developer confidence in the site's value. 'Notably, the winning bid of S$1,376 per sq ft per plot ratio (psf ppr) ranks as the second highest outside central region (OCR) land bid in 2025, just slightly below the SG$1,388psf ppr benchmark set at Bayshore Road. This signal continued optimism for well-located OCR developments,' the research house said. TA Research has a 'buy' call on Sunway with a target price of RM5.68. Further, RHB Research revised its FY27 earnings upwards, raising its forecast by 5% as the project will be launched in 2H26. 'Meanwhile, FY25 to FY27 earnings will be underpinned by strong unbilled sales of RM4.06bil and construction order book of RM6.6bil,' the research house said. RHB Research maintained a 'buy' call on Sunway with a target price of RM5.81. Moreover, the group's construction segment is in for a multi-year earnings growth trajectory underpinned by progress billing from inhouse infrastructure job flows and data centre-related projects. 'We understand that existing data centre tenders are progressing without delays, rebutting concerns on slowdown in award of data centre contracts. Management remains confident to achieve a RM6bil order book target in 2025,' the research house said. Beyond the latest contract win, UOBKH Research said Sunway's healthcare segment is in expansion mode, and the 'strategic' hospital expansion is backed by structural and tourism demand. 'The healthcare segment is poised to ride on the ageing population, rising non-communicable diseases, and the momentum of Tourism Malaysia Year 2026, which includes medical and wellness tourism as part of the promoted areas. In line with this, management targets to increase its foreign patients mix to 15% by the end of this year (from 13% in 1Q25),' the research house said. UOBKH Research also stated Sunway's healthcare listing is on track for early 2026, 'potentially unlocking significant shareholder value'. 'We estimate a potential market valuation of RM16bil to RM19bil, based on 22 times to 26 times 2027 earnings before interest, taxes, depreciation, and amortisation of RM765mil.
