Latest news with #RM40mil
The Star
12 hours ago
- Business
- The Star
Land acquisition in Melaka is yield-accretive for Hektar-REIT
PETALING JAYA: The proposed acquisition of a RM40mil land in Melaka by Hektar Real Estate Investment Trust (Hektar-REIT) as part of a 30-year leaseback deal is yield-accretive in nature and comes with an attractive valuation. Hong Leong Investment Bank (HLIB) Research is positive on the deal, adding that the triple net lease arrangement significantly de-risks the investment by transferring property expenses directly to the tenant. Last Friday, Hektar-REIT announced a related-party transaction to purchase 41.8 acres of leasehold land from KYS College. The acquisition is expected to be completed by the fourth quarter of financial year 2025 (4Q25). The land in Mukim Durian Tunggal, District of Alor Gajah will be leased to KYSA Education Sdn Bhd, the operator of Kolej Yayasan Saad Melaka (KYSM), via a 30-year triple net lease. It featured a 10% rental escalation every three years and an option for a further 30-year extension, potentially continuing until the leasehold expiry. To recap, in July 2024, Hektar-REIT completed the acquisition of KYSM for RM148.5mil, making it the first educational asset in Hektar-REIT's portfolio. The RM40mil acquisition announced last Friday would be financed via a mix of 60% debt (RM24mil) and 40% internal funds (RM16mil), which is set to raise gearing to 42.7% from 41.8%. 'Baking in an estimated 1% manager's fee for FY26, and assuming a 4.93% borrowing cost, this acquisition is poised to lift net profit by 2% and 3.4% in FY26 and FY27 respectively,' according to HLIB Research. On the valuation, HLIB Research said the land purchase accounted for 2.8% of Hektar-REIT's total asset value as of 1Q25. 'It has an initial net property income (NPI) yield of 5.3%, which is higher than the REIT's forecast FY26 portfolio NPI yield of 4.9%. 'Furthermore, the acquisition's implied valuation of RM22 per sq ft is notably below this year's median land transaction price of RM28 per sq ft, indicating a 21% discount,' stated the research house. HLIB Research has maintained its 'hold' call on Hektar-REIT, but raised its target price to 46 sen per unit. The higher target price was on the back of a rolled-over FY26 distribution per unit at a 7.7% yield. This stemmed from a lower 10-year Malaysian Government Securities (MGS) assumption of 3.7% (from 4%), following a 25-basis-point overnight policy rate cut, and is derived from 0.25 standard deviation above the five-year historical average yield spread between Hektar-REIT and the 10-year MGS yield. 'Beyond the financial metrics, this acquisition is strategically beneficial as it diversifies Hektar-REIT's portfolio away from its traditional retail focus and into the education segment,' added HLIB Research.
The Star
2 days ago
- Business
- The Star
OSK diversification plan pays off
HLIB Research said the acquisition offers risk diversification benefits by reducing reliance on a single segment in consumer financing. PETALING JAYA: Hong Leong Investment Bank (HLIB) Research remains positive on OSK Holdings Bhd 's prospects, underpinned by its fast-growing private credit and cables segments, which are driving earnings and diversifying the group's income base beyond property. OSK had announced the acquisition of Wilayah Credit, a motorcycle financing company, which currently has a loan portfolio of about RM40mil. Post-acquisition, OSK can unlock growth by leveraging on its stronger funding capacity. HLIB Research said the acquisition also offers risk diversification benefits by reducing reliance on a single segment in consumer financing, allowing the group to build a more balanced and robust financing portfolio. 'We believe investors continue to undervalue the group's private credit segment. 'For perspective, Qualitas Ltd, which is a listed Australian firm specialising in private credit investments in real estate, is expected to deliver a financial year 2024 (FY24) to FY27 compounded annual growth rate (CAGR) of 25.1% and currently trades at 23.9 times FY26 price earnings ratio, based on consensus estimates. 'Similar to Qualitas, OSK also has private credit exposure in Australia primarily in the real estate segment that makes up 28% of the loan portfolio. In fact, compared wth Qualitas, OSK's loan portfolio has a more balanced and diversified mix both geographically and across customer segments, giving it the advantage of risk diversification,' the research house added. OSK's private credit segment demonstrated a strong track record, delivering a robust six-year pre-tax profit CAGR of 25.1% from FY18 o FY24, which is on par with Qualitas expected growth rate. 'Having grown to a meaningful scale, the segment is well positioned to gain increasing investor visibility as it emerges as a key earnings driver for the group moving forward,' HLIB Research noted. The cables segment is expected to post strong earnings in the second quarter of 2025, supported by the completion of major deliveries to a utility company.
The Star
3 days ago
- Business
- The Star
Malakoff set for earnings upside
PETALING JAYA: Malakoff Corp Bhd has submitted bids under the Energy Commission's (EC) competitive tender launched in May 2025, seeking to extend the power purchase agreements (PPAs) for three of its gas-fired power plants, totalling 2.3GW, through to 2029. The independent power producer also plans to bid for new greenfield plants under the EC tender on top of 2.8GW of initial letters of notification already secured for two new gas-fired power plants, CGS International (CGSI) Research said in a report. Recall that on May 10, 2025, the EC had launched a request for proposal for new gas-fired power generation capacity in Peninsular Malaysia via a competitive bidding exercise, comprising two categories. One was for existing facility or additional capacity, while the second was for the development of new gas-fired power plants. The country has not conducted a thermal power plant tender in over a decade as reserve margins have consistently remained robust at above 30%. But a sharp rise in power demand is expected following a wave of industrial and data centres investments approvals. CGSI Research believes Malakoff is well-positioned to secure wins from the upcoming tender, considering the urgent need to maintain supply stability and reserve margins amid surging power demand, its proven track record in thermal plant development and operations and the availability of ready plans and sites/assets. 'We estimate the plant extensions can generate at least RM40mil in net profit annually from 2026. 'This will be further supported by its circa RM950mil mini hydro project and RM660mil waste-to-energy (WTE) plant, which we project can contribute a combined RM35mil in annual net profit,' the research house said in a report. Additionally, it said a potential 1.4GW greenfield gas plant win from financial year 2030 could mass at least around RM200mil in recurring annual net profit and RM1bil in equity value based on CGSI Research's back-of-the-envelope calculations. While the stock has rebounded from its lows, CGSI Research believes there is further upside, underpinned by a pipeline of unpriced assets, namely its mini hydro and WTE plants, stake in E-Idaman Sdn Bhd and possible extensions for its expired or expiring plants. 'Hence, we retain our 'add' call. Our target price of RM1.20 conservatively assumes just one joint-venture win. 'All in, we estimate these opportunities are worth at least RM1.2bil or around 25 sen per share, value that is not yet fully priced in at current price levels.' Valuation-wise, the stock is trading at 5.2 times expected 2026 earnings and offers net dividend yield of 5.5%. According to the research firm, Malakoff's earnings are poised for an inflection from 2026, driven by improving plant performance and the addition of new renewable energy and thermal capacities. CGSI noted that prior to 2023, Malakoff's power assets, in particular its coal plants, had suffered operational setbacks due to boiler and turbine issues. This affected the plants' equivalent availability factors (EAF) and output levels. However, performance has improved noticeably in recent quarters with EAF showing signs of greater stability, it added. At the time of writing, shares of Malakoff were trading at 91 sen, up 7.1% year-to-date.
The Star
22-07-2025
- Politics
- The Star
Nothing final yet on Sulawesi Sea issue with Indonesia, PM tells Dewan Rakyat
KUALA LUMPUR: No conclusive agreement has been reached with Indonesia on the maritime border dispute involving two islands in the Sulawesi Sea, says Datuk Seri Anwar Ibrahim. The Prime Minister said that although the International Court of Justice (ICJ) had decided in 2002 that Ligitan and Sipadan belonged to Malaysia, there was still a dispute over the maritime borders at Blocks ND6 and ND7 of the Sulawesi Sea owing to conflicting intertidal claims. "We are friends with Indonesia and are (negotiating) with them on the issue," he told Datuk Seri Ronald Kiandee (PN-Beluran) in the Dewan Rakyat on Tuesday (July 22). Although he had met with Indonesian President Prabowo Subianto on four previous occasions, Anwar said talks between them on several issues, including jointly developing the disputed maritime areas, were informal. ALSO READ: Ambalat issue: Proposal for joint development in Sulawesi Sea yet to be finalised "We have been invited to Jakarta on July 29 for talks, and the Sabah Chief Minister has been invited to be part of the delegation because it involves his state's borders. "Sabah has not given its agreement (to any proposals) and neither have we (Putrajaya). "Talks have not been finalised and nothing has been agreed upon... (they) remain merely proposals," he added. ALSO READ: Anwar, Prabowo agree to boost strategic cooperation, to jointly develop Ambalat area Kiandee wanted to know the details of a purported "agreement" between Malaysia and Indonesia in 2023 on the maritime border issue involving Blocks ND6 and ND7 which contain, on the high end of estimates, about 1.4 trillion cubic metres of gas and 760 million barrels of oil reserves. Anwar clarified that details of the proposed joint development between Malaysia and Indonesia to develop the areas were not made public owing to a non-disclosure clause because both Blocks ND6 and ND7 – referred to by Indonesia as the Ambalat Block – were not part of the 2023 agreement. He said Malaysia remains firm on its sovereignty over the two areas. ALSO READ: Ambalat block: Declassify agreement with Indonesia in public interest, says Kiandee "Should we choose armed conflict to resolve the dispute, or negotiation? "We chose negotiation, as we are both friendly nations," he added. He also told Datuk Mohd Shahar Abdullah (BN-Paya Besar) that efforts have been made to beef up border security between the two nations, particularly in Sabah and Sarawak. This includes the acquisition of new patrol vessels for the Malaysian Maritime Enforcement Agency (MMEA) and an additional RM40mil allocation for the Eastern Sabah Security Command (Esscom). Shahar had asked what was being done to improve border security in Sabah and Sarawak in light of the rapid development of Indonesia's new capital city, Nusantara, located in East Kalimantan.
The Star
15-07-2025
- Business
- The Star
Resources, halal standards and JS-SEZ attracting investors
JOHOR BARU: Malaysia's abundant natural resources, halal certification standards and the Johor-Singapore Special Economic Zone (JS-SEZ) have made the state an attractive destination for investors in food-related industries. Johor investment, trade, consumer affairs and human resources committee chairman Lee Ting Han said food processing companies from Singapore and South Korea are actively exploring expansion under the JS-SEZ initiative. 'They are looking at Johor as an alternative or as a food production hub because of our natural resources and also because of Malaysia's halal certification standards,' he said in an interview. Lee said the recent launch of a RM40mil joint venture between digital agri-food company Farmbyte – a subsidiary of state-owned Johor Corporation – and Singapore agri-tech firm Archisen reflects strong investor confidence in Johor as a food production hub. 'The collaboration makes the project, located in Iskandar Puteri, one of the largest vertical farming plants in the country. 'The joint venture company is actively exploring other bigger sites for the near future. The first batch of produce from the farm in Iskandar Puteri will enter the market in September,' he said. Lee said the farm, which uses climate control technologies, would initially focus on high-value vegetables before expanding to other greens to reduce production costs and product prices. He said that Farmbyte and Archisen would offtake the vegetables produced by the joint venture for Malaysian and Singaporean markets, respectively. While there are no strict policies compelling foreign food companies investing in Johor to supply products to the local market to strengthen food security, Lee said that companies receiving government incentives would be subject to certain conditions to supply to the local market. Food security is one of the 11 key economic sectors outlined in the JS-SEZ initiative. The other sectors include logistics, manufacturing, financial services, business services, digital economy, tourism, education, health, energy and the green economy. According to the Malaysian Investment Development Authority, the JS-SEZ covers 3,588sq km, comprising nine flagship zones – Johor Baru, Iskandar Puteri, Tanjung Pelepas, Tanjung Langsat-Kong Kong, Senai-Skudai, Kulai-Sedenak, Desaru-Penawar, Forest City and Pengerang.
