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New Straits Times
08-07-2025
- Automotive
- New Straits Times
OSK's entry into motorcycle financing offers fresh growth, says HLIB
KUALA LUMPUR: OSK Holdings Bhd's move into motorcycle financing opens up a new growth opportunity in an expanding market while helping diversify its risk across various customer segments. According to Hong Leong Investment Bank (HLIB), OSK is not entering the segment from scratch and the acquisition of Wilayah Credit provides a faster entry, as the company already has strong dealer networks and operational expertise. HLIB said it also comes with a valuable customer database and credit behaviour insights, which OSK can leverage across its broader financing ecosystem. "With OSK's strong treasury team and ability to secure competitive funding, there is potential to scale up the loan portfolio more effectively post-acquisition," it said. HLIB noted that OSK has agreed to acquire Wilayah Credit for RM16.5 million, a sum that is around RM300,000 higher than its net assets of RM16.2 million, translating to a premium of roughly 7.7 per cent after factoring in the disposal of shop lots. The research firm said the premium is justified, as the real value of the acquisition goes beyond physical assets. It includes intangible advantages such as a robust customer database, long-standing dealer relationships, and a solid market presence, which are not reflected in the balance sheet. "While the acquisition is modest in size, it reflects OSK's proactive approach to managing and diversifying its risk," the firm said. HLIB has reiterated its 'Buy' recommendation on OSK, keeping the target price unchanged at RM2.00. The firm highlighted OSK's attractive multi-engine growth story, driven by the rapid expansion of its private credit segment, which has recorded a strong five-year compound annual growth rate (CAGR) of 24.8 per cent and is becoming a major contributor to the group's overall growth.
New Straits Times
05-05-2025
- Business
- New Straits Times
HLIB: Sunway REIT's education asset sale frees up capital for future growth
KUALA LUMPUR: Sunway Real Estate Investment Trust's (Sunway REIT) RM613 million disposal of its education asset is expected to unlock capital for future acquisitions, according to Hong Leong Investment Bank Bhd (HLIB). "Overall, we are neutral on this disposal, although Sunway REIT is losing a high NPI yielding asset, the deal is able to help free its capital for future acquisitions," HLIB said in a research note. The sale of the Sunway University and college campus — fully cash-based and slated for completion in the second half of financial year 2025 (FY25) — was priced at a 4.6 per cent premium to its independently assessed fair value. HLIB noted the transaction came as a surprise, as the firm had not anticipated Sunway REIT to divest its education assets in the near term. The campus had contributed about 5.1 per cent of revenue and 6.9 per cent of NPI in FY2024. "By disposing the education asset, total asset value will drop circa 5.2 per cent, if the net proceeds were used to pay down debts," it said. According to Sunway REIT, the completion of the disposal, the net proceeds is intended for future yield accretive acquisitions. It also said in the event of no new acquisitions/AEIs within 12 months, the net proceeds will be used to pay down its outstanding debts and thus, gearing ratio is expected to drop to 38 per cent (from 41 per cent). HLIB believes this will allow Sunway REIT to have more capital/debt headroom to fund its future acquisitions such as Sunway Velocity (RM1 billion) in the pipeline. In summary, the firm is neutral on the disposal of its education asset. Although the deal is yield dilutive to Sunway REIT, HLIB said it will have a one off gain of RM21 million and also more capital to fund its future acquisitions, potentially reducing the dependency of equity funding for future acquisitions. "Following the disposal of its education asset and annual report update, we cut FY25/FY26 estimates by 2.5 per cent/5.7 per cent, respectively. Besides, we introduce FY27 forecasts." HLIB maintains a "Buy" call on Sunway REIT, albeit with a lower target price of RM2.00 (from RM2.04).
