Latest news with #HLIBResearch
The Star
2 hours ago
- Business
- The Star
Hiap Teck eyes stronger recovery through ESSB gains
HLIB Research expects the group's earnings to remain under pressure in the near term. PETALING JAYA: Hiap Teck Venture Bhd is expected to post another muted quarter in the fourth quarter of financial year ending July 31, 2025 (4Q25), weighed down by persistent weak steel prices, lingering uncertainties from US tariffs and the sluggish pace of domestic infrastructure project rollouts. In 3Q25, the group posted a net profit of RM34.28mil on the back of RM344.84mil in revenue, compared with RM46.82mil and RM399.68mil, respectively, in the corresponding quarter a year earlier. For the cumulative nine months, Hiap Teck reported a net profit of RM89.41mil and revenue of RM1.09bil. Its core net profit dropped 42.9% year-on-year to RM47mil, primarily due to margin compression in its trading and downstream segments, driven by weaker selling prices and reduced sales volumes. These factors offset stronger contributions from its 27.3%-owned associate Eastern Steel Sdn Bhd (ESSB), which saw core earnings rise to RM71.1mil. The improvement came on the back of higher sales volumes that helped mitigate lower average selling prices. Looking ahead, Hong Leong Investment Bank (HLIB) Research expects the group's earnings to remain under pressure in the near term, citing macroeconomic challenges in China and the delayed rollout of local infrastructure projects as key headwinds. However, steady contributions from the scaffolding division and ESSB are expected to help cushion the impact as Hiap Teck gradually increases capacity utilisation at its hot rolled coil (HRC) plant. The research house also pointed out that ESSB's HRC plant, which began operations in December 2024, is currently running at about 50% capacity. Hence, Hiap Teck is looking to ramp up utilisation to near 100% by the end of 2025, which will further bring down its unit conversion cost. HLIB Research has revised its financial year 2025 (FY25) to FY27 core net profit forecasts lower by 3.3%, 0.9% and 3.8%, respectively, to reflect reduced sales volume assumptions. Despite the near-term earnings weakness, the research house maintained a 'buy' call on Hiap Teck with a lower target price of 34 sen, based on a revised valuation of 6.5 times FY26 core earnings per share of 5.2 sen.
The Star
2 days ago
- Automotive
- The Star
Auto industry poised for subdued growth
PETALING JAYA: The automotive sector appears set for a more subdued 2025, with total industry volume (TIV) projected to normalise after last year's record high. Analysts expected a mixed outlook, shaped by softening consumer sentiment, rising competition, and policy uncertainty, but supported in part by new model launches and ongoing infrastructure development. BIMB Research revised its 2025 TIV forecast downwards to 790,000 units, a 2.5% cut from its earlier estimate of 810,000 units. It noted that the adjustment was prompted by weaker-than-expected momentum in the first quarter of 2025 (1Q25), attributed to soft consumer sentiment and lingering uncertainty over the timing of RON95 subsidy rationalisation. However, BIMB Research pointed to a potential sequential recovery in the second half of the year, underpinned by promotional activities, longer working days, and stable loan approval rates. Hong Leong Investment Bank Research (HLIB Research) projected a sharper decline, expecting TIV to fall to 750,000 units in 2025, down 8.2% year-on-year, compared to the Malaysian Automotive Association's (MAA) forecast of 780,000 units. HLIB Research remarked that current order backlogs have further dwindled in 2Q25 and this is expected to continue softening in subsequent quarters as consumer sentiment weakens in tandem with a slower economic outlook as well as petrol subsidy rationalisation in the second half of 2025 (2H25). The sector's performance in 1H25 reflected these trends. According to MAA, TIV in May 2025 rose 12.4% month-on-month to 68,000 units, driven by normalised working days after the April festive holidays. However, on a year-on-year basis, sales fell 3.2%, contributing to a 5% decline in year-to-date volume to 316,700 units. This was largely attributed to easing consumer sentiment following the record 816,700 units achieved in 2024. BIMB Research said it saw structural support for the sector from 'new model launches, rising electric vehicle (EV) popularity, and infrastructure buildout'. Key launches expected in the second half included Perodua's eMO battery electric vehicle, Proton's facelifted X50 and new Saga, and Honda's refreshed Civic. Chinese brands were also stepping up, with Chery's iCAUR electric sports utility vehicles set for an Asean debut in the third quarter and TQ Wuling planning a mass-market electric vehicle (EV) below RM100,000 by year-end. BIMB Research noted: 'This strong pipeline across ICE and EV segments is expected to drive demand and refresh the competitive landscape.' Both BIMB Research and HLIB Research maintained a 'neutral' stance on the sector. BIMB Research cautioned that the sector's recovery is expected to be uneven due to elevated borrowing costs, fragile supply chains, and pricing pressure from Chinese manufacturers. Similarly, HLIB Research said earnings were likely to fall in 2025 on the back of lower sales volume and higher operating costs (aggressive sales campaigns), but partially cushioned by the strengthening of the ringgit. On the EV front, BIMB Research highlighted that 'EV adoption will continue to expand structurally, particularly as the current completely built units import tax exemption is set to expire at the end of 2025'. It forecasts EV market share could reach up to 4% by year-end, driven by broader model offerings and stronger national brand participation. Still, achieving the government's 10,000 public charger target by end-2025 remained challenging, with monthly installations needing to average 730 units. The looming revision of the open market value-based excise duty for completely knocked down vehicles in January 2026 could spur frontloaded purchases in late 2025. BIMB Research noted that any delay or adjustment in the policy could 'further sustain demand momentum in 2H25'.
New Straits Times
3 days ago
- Business
- New Straits Times
Malaysia gains from supply chain shifts; Sunway to benefit: HLIB
KUALA LUMPUR: Malaysia continues to benefit from global supply chain diversification, which is driving sustained demand for industrial space amid rising geopolitical tensions, according to HLIB Research. In line with this, HLIB said Sunway Bhd's enlarged land bank in Rawang, Selangor, is well positioned to strengthen the group's economies of scale and deliver stronger returns. The research house noted that Sunway's recent acquisition of a 40.3-hectare parcel has increased its total land holding in Rawang to 139.6 hectares, with a combined gross development value (GDV) of RM2.7 billion. According to HLIB, the larger land bank will allow Sunway to spread common infrastructure and marketing costs across a bigger GDV, driving greater operational efficiency and improving overall return on investment. "While Sunway has prior experience with smaller-scale industrial projects in Subang and Dengkil, this represents its first full-fledged large-scale industrial park. HLIB Research added that the move allows Sunway to diversify its portfolio, reducing reliance on the residential segment and providing a more balanced, resilient revenue stream. Sunway purchased the freehold land in Kuang for RM65.1 million, with an indicative GDV of RM700 million. It will be acquired through Sunway Rawang City Bhd, a joint venture between Sunway (70 per cent) and Amal Resources (30 per cent). The transaction is expected to be completed by the fourth quarter of 2025. The land will be developed into an industrial tech park, with the first launch targeted in the first quarter of 2028, following the construction of a LATAR Expressway interchange. HLIB Research said the acquisition price implies a land cost-to-GDV ratio of 9.3 per cent. It noted that the land comprises about 26.8 hectares zoned for industrial use, 9.7 hectares zoned for agricultural use and 3.8 hectares designated for electrical pylons. "The group is expected to incur additional costs to convert the agricultural portion for industrial use, which is projected to raise the adjusted land cost-to-GDV ratio to slightly above 10 per cent, which is still within the typical 10–20 per cent range for industrial land in the Klang Valley," HLIB Research added. The firm kept its "Buy" call with an unchanged target price of RM5.90 a share. "With the group's widening exposure in the Malaysian economy, the stock provides a good proxy to the domestic economy, which is currently entering a new phase of growth," it added.
The Star
6 days ago
- Business
- The Star
Westports to be buoyed by tariff hikes, expansion
HLIB Research lifted its earnings projections for Westports by 4.1% for the financial year ending 2025 (FY25), 18.4% for FY26, and 23.6% for FY27. PETALING JAYA: Westports Holdings Bhd appears well-positioned to deliver sustainable earnings and operational resilience, supported by tariff hikes and ongoing expansion works, despite headwinds in the global trade environment. Hong Leong Investment Bank (HLIB) Research maintained its 'buy' call on the port operator, while raising its discounted cash flow-derived target price to RM6.08 from RM5, following an upward revision to earnings forecasts. The revision reflected the approved port tariff adjustments granted by the Transport Ministry, aimed at supporting Westports' infrastructure investments and long-term growth. 'The tariff adjustment is essential to support Westports' ongoing infrastructure investments and ensure the sustainable growth and competitiveness of Port Klang,' said HLIB Research in its note. It added that earnings sustainability and resilient volume movements were likely, even amid concerns over a global trade slowdown. HLIB Research lifted its earnings projections for Westports by 4.1% for the financial year ending 2025 (FY25), 18.4% for FY26, and 23.6% for FY27. This followed assumptions on the phased tariff increases, which would commence on July 15, 2025. The first phase involved a 15% hike for container handling services, followed by a 10% increase for container, conventional and marine services from Jan 1, 2026. A further 5% adjustment would take effect on the same segments later that year. Westports operated at an optimal utilisation rate of 80% of its 14 million twenty-foot equivalent unit capacity. Management projected mid-single-digit growth in container throughput until 2027, with new capacity expected to come online by mid-2028. 'We do not anticipate the expected global economic slowdown to significantly impact market expectations regarding Westports' near-term operational growth,' HLIB Research stated. The research house also pointed to the company's dividend reinvestment plan (DRP) as a positive for shareholders and expansion plans. It said: 'The proposed DRP is poised to enhance shareholder value, while supporting medium-term capital expenditure requirements.' The DRP offered shares at a discount of less than 10% to the five-day volume weighted average price prior to the price fixing date, with major shareholders –including Pembinaan Redzai and its affiliate Semakin Ajaib, as well as South Port Invest – collectively committing to participate. The parties represented 69.1% of Westports' share capital.
The Star
7 days ago
- Business
- The Star
Westports to sustain earnings despite global trade slowdown
PETALING JAYA: Westports Holdings Bhd appears well-positioned to deliver sustainable earnings and operational resilience over the coming years, supported by tariff hikes and ongoing expansion works, despite headwinds in the global trade environment. Hong Leong Investment Bank (HLIB) Research maintained its 'buy' call on the port operator, while raising its discounted cash flow (DCF)-derived target price to RM6.08 from RM5, following an upward revision to earnings forecasts. The revision reflected the approved port tariff adjustments granted by the Transport Ministry (MoT), aimed at supporting Westports' infrastructure investments and long-term growth. 'The tariff adjustment is essential to support Westports' ongoing infrastructure investments and ensure the sustainable growth and competitiveness of Port Klang,' said HLIB Research in its latest note. It added that earnings sustainability and resilient volume movements were likely, even amid concerns over a global trade slowdown. HLIB Research lifted its earnings projections for Westports by 4.1% for the financial year ending 2025 (FY25), 18.4% for FY26, and 23.6% for FY27. This followed assumptions on the phased tariff increases, which would commence on July 15, 2025. The first phase involved a 15% hike for container handling services, followed by a 10% increase for container, conventional and marine services from Jan 1, 2026. A further 5% adjustment would take effect on the same segments later that year. Westports operated at an optimal utilisation rate of 80% of its 14 million twenty-foot equivalent unit (TEU) capacity. Management projected mid-single-digit growth in container throughput until 2027, with new capacity expected to come online by mid-2028. 'We do not anticipate the expected global economic slowdown to significantly impact market expectations regarding Westports' near-term operational growth,' HLIB Research stated. The research house also pointed to the company's Dividend Reinvestment Plan (DRP) as a positive for shareholders and expansion plans. It said: 'The proposed DRP is poised to enhance shareholder value, while supporting medium-term capex requirements.' The DRP offered shares at a discount of less than 10% to the five-day volume weighted average price prior to the price fixing date, with major shareholders — including Pembinaan Redzai and its affiliate Semakin Ajaib, as well as South Port Invest — collectively committing to participate. These parties represented 69.1% of Westports' share capital. Meanwhile, Westports pressed on with its major expansion programme, which aimed to double its handling capacity to 28 million TEUs through the development of container terminals, CT10 to CT17. Dredging and reclamation works for CT10 and CT11 were progressing, with construction slated to begin in the first quarter of 2027. CT10 was expected to commence operations by mid-2028, followed by CT11 at end-2029.
