Latest news with #RM1.96
New Straits Times
24-06-2025
- Business
- New Straits Times
RCE Capital impairments to stay above RM30mil as civil servant bankruptcies rise
KUALA LUMPUR: RCE Capital Bhd's impairment provisions to stay above RM30 million in the financial year 2026 (FY26), as civil servant bankruptcies rise and the fallout from the "Op Sky" fraud probe continues to ripple through its loan book. CIMB Securities said while there are initial signs of moderation in impairment provisions, "management cautions it is too early to call a normalisation trend", adding that impairments in FY26 are likely to remain well above historical averages. The group's impairment losses surged to RM15 million in the fourth quarter ended March 31, 2025 (4QFY25), up 79.2 per cent quarter-on-quarter, bringing total impairment losses for the year sharply higher. The spike was attributed to increased financing disbursements, updated macro assumptions, and scam-related impairments linked to the Malaysian Anti-Corruption Commission's "Op Sky" investigation. The probe uncovered a syndicate that allegedly helped blacklisted civil servants obtain loans using forged documents. As of May 27, about RM1.96 million, or 0.1 per cent of RCE's financing portfolio, was identified as exposed and has been fully impaired. Adding to the pressure is the government's "second chance policy", which allows individuals to voluntarily declare bankruptcy in exchange for financial rehabilitation. Impairments related to bankruptcy jumped 115.2 per cent year-on-year in FY25. Consequently, CIMB Securities said RCE's non-performing financing (NPF) rose to RM95.5 million in 4QFY25, up 14.7 per cent from a year earlier, lifting its NPF ratio to 4.6 per cent, above its historical range. The firm has revised down its earnings forecasts for RCE by up to 6.1 per cent for FY26 to FY28 and lowered its dividend discount model-based target price to RM1 from RM1.23. The brokerage reiterated a "reduce" call on the stock. RCE has begun phasing out the use of the Accountant General's Department (AGD) as a salary deduction intermediary due to less favourable commercial terms, including a newly imposed five per cent profit rate cap on personal financing. Instead, the group will channel all new disbursements through its subsidiaries, Corewealth Alliance Dynamic Sdn Bhd and RCE Marketing Sdn Bhd, both of which use Angkasa's payroll deduction platform. "This transition enables RCE to retain a secure and efficient collection channel while redirecting some cost savings that were previously incurred as AGD's upfront fee. "It allows more flexible product offerings, such as competitive profit rates, cash rebates or value-added features," said CIMB Securities. RCE closed at RM1.18 on Monday, valuing the company at RM1.75 billion. The stock has declined 15.4 per cent over the past year and currently trades at a price-to-book ratio of two times, a premium to the sector average of one time. Looking ahead, the company expects a modest recovery in loan growth, supported by phased civil servant salary hikes introduced in December 2024 and January 2026. However, CIMB Securities cautioned that borrowing capacity among civil servants may already be stretched amid rising living costs and debt levels. "Coupled with intensifying competition from digital lenders like TnG Digital, Grab and Shopee, RCE's growth prospects remain constrained," it said.
Daily Express
10-06-2025
- Business
- Daily Express
Poor governance of GLCs to blame: Managed by some people of questionable integrity and knowledge
Published on: Tuesday, June 10, 2025 Published on: Tue, Jun 10, 2025 By: David Thien Text Size: Datuk John Lo (right) shared his opinions in a 'Sabah Voices to Action' podcast with former Sabah Law Society President Datuk Roger Chin (left) with Kopi Tiam Council hosts Adi and Haffisz organised by NGO Sabar recently on 'Economic Imperative on Stringent Governance for Sabah's GLCs'. Kota Kinabalu: Many of the 250 GLCs continue to lose millions of ringgit yearly. In Kota Kinabalu alone, most of the failed big projects are GLC joint ventures with non-Sabahan companies. 'What it tells us is that all these GLCs have very, very poor governance and this is the whole issue in Sabah. They are managed by some chairmen and board of directors who are of questionable integrity or knowledge. So things just roll along without good performance.' Advertisement 'If all or even 75 per cent of GLCs are doing well, the State government should have been receiving billions of ringgit in term of returns every year because the assets controlled by the GLCs are in the hundreds of billions of ringgit,' said Datuk John Lo, retired banker and advisor to the State Government in his role in the Sabah Economic Advisory Council (SEAC) as well as the Institute for Development Studies (IDS). 'Even if you take three or four per cent returns, we should be getting at least three, four or five, or six billion.' He shared his opinions in a 'Sabah Voices to Action' podcast with former Sabah Law Society President Datuk Roger Chin with Kopi Tiam Council hosts Adi and Haffisz organised by NGO Sabar recently on 'Economic Imperative on Stringent Governance for Sabah's GLCs'. Lo said these GLCs have failed to deliver decent returns from their assets. 5 per cent is acceptable and 10 per cent is considered good. If only the GLCs can generate 5 per cent or better from their assets, the Sabah Government would have several more billions of dividends each year! He said 5 per cent return on assets shouldn't be an issue as the cost of capital assets like land is practically free. Private sector can generate much better than 5 per cent even though they have to pay for land at market prices and to service interest for loans. Compare this to the RM143m the Sabah Government received from the few performing GLCs, of which RM50m was from SMJ Energy. Lo said Johor's KPJ HealthCare Bhd with 43.38 per cent owned by Johor Corp and listed on Bursa Malaysia with a total share value RM1.96 billion, is an example for Sabah's GLCs to emulate. 'KPJ HealthCare Bhd can deliver more dividend than all Sabah's GLCs Profit with more than RM350 million!' Sabah GLCs are also very fond of signing JVs with non-Sabahan companies for whatever reason. 'We need to cultivate homegrown businessmen rather than making or adding money to some non-Sabahan entities instead of within Sabah,' Lo said. 'My point is this, if the GLCs are successful, we could have listed on Bursa Malaysia – we don't need to raise so much government funds. 'Number two, we don't need to depend on the Government budget much. We can raise a lot of money by the billions by going to the market. Datuk Roger Chin said the traditional type of JV is literally over a piece of land. What happens is that the GLC ends up with 10 shoplots as an example. 'If the GLC had developed the prime piece of land, say in Kota Kinabalu, by itself, it would have gotten a lot more money and assets. 'I understand it takes a lot of money to develop the project. The GLC may not have the funds, but funds could have been raised by other ways. 'I have always found it amazing how they can just settle for 10 shoplots. Looking at all the JVs signed, you will realize that is actually like that.' Lo adding to Roger, said: 'If you have a piece of real estate that is very valuable, why does that GLC need to enter into a JV with somebody? They could have easily monetised this. 'You can actually raise funds because you already got a very valuable asset. Why do we need another company in the real estate business to come in? We have a lot of Sabahan developers who can do it. Now why do we need to enter into a JV with these people from outside?' Roger: 'For me, GLCs have a purpose. They are for industries or sectors that no one wanted to go into. Like a milk factory or a cement plant. 'They should only be in sectors where the private sector is not better than them. So they have to grow to be better than the private sector in these industries.' According to Lo, in Sabah two things have been happening for years. 'GLCs are killing the private sector in many areas. 'Our private sector have already been more or less wiped out. Our private sector has no chance to really develop. Worse is that with change of governments, one of the first victims will be the private sector players. 'Oh, you supported the last government so I kill you. Our political leaders they must stop this. 'We cannot have economic growth on a sustainable basis if you keep killing your own Sabahan entrepreneurs. More so, you kill Sabahan entrepreneurs and bring in outsiders. This is very, very serious. The mindset must change. 'Very simply put, if the GLCs belong to the government, then there is clearly a conflict of interest going on. 'The conflict is that I will support the ones that I own. I will give the ones that I own more of a leg up than it should, and therefore making it unfair for the private sector. That's how it distorts the market,' said Roger. 'It is bad because policies will be tailored to favour the GLCs rather than the whole private industry. That's how it distorts the market and the private sector suffers because of that,' Chin explained. He called for a Procurement Act that will be a game changer to equalise the playing field distorted by government's preference or overzealous enforcement of Bumiputra policies. 'Of course, all GLCs can be turned around! Nothing is impossible. All that is needed is political will and political courage. Hajiji (Chief Minister) has started the ball rolling. There are capable Sabahan officers and professionals who can turn around the GLCs!' 'For the first time in Sabah with Hajiji as CM and Masidi as Finance Minister, we have the political courage. The abuses, losses and misgovernance of GLCs have been swept under the carpet for too long. Hajiji has appointed Masidi to be in charge of all GLCs.' 'Sabah Voices to Action - Shaping Sabah's Future Together' is a citizen-driven, non-partisan initiative running from March to June 2025, dedicated to amplifying Sabahans' voices, fostering meaningful discussions, and shaping policies on education, healthcare, public infrastructure, and good governance. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
New Straits Times
28-05-2025
- Business
- New Straits Times
Hong Leong Capital posts RM40.8mil net profit amid market volatility
KUALA LUMPUR: Hong Leong Capital Bhd reported a net profit of RM40.8 million for the first nine months of financial year 2025 (9M FY25) due to lower equity investment returns. The net profit for the quarter ended March 31, 2025 declined 33 per cent from RM61.2 million a year ago. In a filing with Bursa Malaysia, Hong Leong Capital said the investment banking and stockbroking segment recorded lower pre-tax profit of RM12 million, down 11 per cent from RM13.9 million last year. This is due to lower profit contribution from stockbroking division. The investment holding and others segment slipped into the red to RM1.96 million from a pre-tax profit of RM11 million, dragged by revaluation loss of financial assets at FVTPL Conversely, fund management and unit trust management segment posted higher pre-tax profit of RM4.9 million, higher than RM1.98 million last year due to lower overhead expenses. Hong Leong Capital chairman Tan Kong Khoon said the performance was affected by market volatility stemming from heightened geopolitical tensions and evolving global trade dynamics. He said the external headwinds had a direct impact on the stock market, as seen in the 5.0 per cent decline of the FBM KLCI since the start of the financial year in July 2024 that adversely affected its equity investment returns. "Hong Leong Capital will remain focused on executing our strategic priorities and delivering long-term value creation for all our stakeholders. "A key initiative in this direction will be bolstering the sales outreach of Hong Leong Capital suite of products by leveraging on the integrated distribution network of the financial group. "This includes the upcoming foreign-denominated funds from our asset management division," he added. Tan said the company is enhancing the stockbroking application to create a more integrated experience for users to improve customer experience and serve as a key feature in client acquisition. These initiatives, he said, will continue to be underpinned by strict capital liquidity, and cost discipline.
Yahoo
01-04-2025
- Business
- Yahoo
Calculating The Fair Value Of Hap Seng Plantations Holdings Berhad (KLSE:HSPLANT)
Using the 2 Stage Free Cash Flow to Equity, Hap Seng Plantations Holdings Berhad fair value estimate is RM2.36 Hap Seng Plantations Holdings Berhad's RM1.96 share price indicates it is trading at similar levels as its fair value estimate Analyst price target for HSPLANT is RM2.40, which is 1.6% above our fair value estimate Today we will run through one way of estimating the intrinsic value of Hap Seng Plantations Holdings Berhad (KLSE:HSPLANT) by taking the expected future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. Believe it or not, it's not too difficult to follow, as you'll see from our example! Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (MYR, Millions) RM141.3m RM123.3m RM113.8m RM108.9m RM106.8m RM106.5m RM107.5m RM109.3m RM111.8m RM114.8m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ -7.69% Est @ -4.30% Est @ -1.93% Est @ -0.27% Est @ 0.89% Est @ 1.70% Est @ 2.27% Est @ 2.67% Present Value (MYR, Millions) Discounted @ 8.3% RM130 RM105 RM89.5 RM79.1 RM71.6 RM65.9 RM61.3 RM57.6 RM54.3 RM51.5 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM766m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.3%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM115m× (1 + 3.6%) ÷ (8.3%– 3.6%) = RM2.5b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM2.5b÷ ( 1 + 8.3%)10= RM1.1b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is RM1.9b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of RM2.0, the company appears about fair value at a 17% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Hap Seng Plantations Holdings Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.3%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Hap Seng Plantations Holdings Berhad Strength Earnings growth over the past year exceeded the industry. Currently debt free. Dividends are covered by earnings and cash flows. Dividend is in the top 25% of dividend payers in the market. Weakness No major weaknesses identified for HSPLANT. Opportunity Good value based on P/E ratio and estimated fair value. Threat Annual earnings are forecast to decline for the next 3 years. Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Hap Seng Plantations Holdings Berhad, we've put together three fundamental items you should further research: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hap Seng Plantations Holdings Berhad (at least 1 which makes us a bit uncomfortable) , and understanding these should be part of your investment process. Future Earnings: How does HSPLANT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every Malaysian stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
