Latest news with #TAResearch
The Star
5 days ago
- Business
- The Star
New property developments to bolster Gadang
TA Research remains cautious on Gadang's job replenishment outlook. PETALING JAYA: Gadang Holdings Bhd 's near-term priority should be to reinforce cost optimisation efforts and enhance profit margins, analysts say. To support a more sustainable earnings trajectory, a disciplined cost management strategy must be implemented in tandem with active participation in selective tender opportunities, TA Research said in a report. The research house also remained cautious on Gadang's job replenishment outlook. As of end-May 2025, Gadang's construction order book stood at RM839mil, representing 1.8 times construction revenue for the group's financial year 2025, ended May 31 (FY25) . Unbilled property sales amounted to RM297mil. Considering the heightened competition in the construction industry, TA Research has adopted a conservative assumption of RM300mil in new job wins a year for the group. This is reflective of the group's historical track record, prevailing tender success rate, and current sector dynamics. TA Research maintained its sum-of-parts derived target price of 22 sen a share and reiterated its 'sell' recommendation. This is premised on an unfavourable risk-reward profile. The shares closed at 27 sen in yesterday's trading. TA Research also made no changes to its FY26-FY27 earnings estimates. It introduced its FY28 projections, anticipating earnings growth of 25.9%. The research house expects Gadang's property segment to remain a core earnings driver with new launches bolstered by aggressive pricing strategies and attractive sales incentives tailored to meet sustained housing demand.
The Star
22-07-2025
- Business
- The Star
SunCon navigates probe with steady outlook
TA Research has revised the company's ESG rating to three stars from four. PETALING JAYA: There could be some near-term reputational damage to Sunway Construction Group Bhd (SunCon) in relation to the investigation of an employee connected to a Johor data centre (DC) project tender by the Malaysian Anti-Corruption Commission (MACC), but the focus will remain on whether the company can continue to win more DC projects. Analysts covering SunCon said while the case would run its course and be eventually settled, the company, which has a sterling reputation for corporate disclosures, must, for now, bear the brunt of reputational damage. Several analysts have also revised the company's environmental, social and governance (ESG) premium tagged to its share price, which suffered a sell-down on Monday before recovering some ground. Maybank Investment Bank Research has maintained a 'buy' call on the stock with a target price (TP) of RM6.72 and an earnings estimate premised on annual job wins of RM7bil. It believes there should not be too many negative repercussions over time once the case has been settled, though there may be near-term distractions. Following news of the MACC investigation, SunCon moved swiftly to manage the situation, including a briefing with analysts. However, several analysts noted that the investigation has uncovered some operational weaknesses. TA Research, which maintained a 'sell' call on the stock, has revised the company's ESG rating to three stars from four, impacting the TP, which has been lowered to RM5.59 from RM5.76 with unchanged earnings estimates. 'We are undoubtedly surprised by the development, particularly given SunCon's strong reputation for corporate governance and its established suite of compliance policies,' it said, adding that while the reputational damage cannot be quantified at this juncture, there seems to be no systemic failure, but new clients may impose more stringent due diligence or require additional assurance on project execution standards. CGS International Research has maintained a 'hold' call on the stock, noting that the valuation of 22 times the financial year ending Dec 31, 2026 price-to-earnings 'is not compelling at a premium to the sector average of 14 times, with the MACC inquiry likely to be a share price overhang until it concludes'. It pointed out that investors ascribed a premium to the return-on-equity DC exposure for more meaningful earnings growth beyond FY25. The TP was lowered to RM5.50 from RM5.90. SunCon's net profit for the first quarter of financial year ended March 31, 2025 (1Q25) surged to RM75.72mil, up from RM32.40mil in the same period last year. Revenue climbed 132% to RM1.40bil compared with RM604.80mil previously, underpinned by robust performance from the construction segment. In a statement on its first quarter financial performance announced in May, the company said its construction segment delivered a remarkable improvement in performance, with revenue rising 152% from RM543.6mil in 1Q24 to RM1.37bil in 1Q25.
The Star
17-07-2025
- Business
- The Star
Improving credit sentiment on OPR cut
PETALING JAYA: The cut in the overnight policy rate (OPR) is expected to provide a lift to credit sentiment and ease financing burdens, with positive implications for the banking and property sectors. Bank Negara had reduced the OPR by 25 basis points (bps) to 2.75% last Wednesday – the first cut in nearly two years – citing pre-emptive measures to support growth amid a softening global outlook. The policy rate had remained unchanged since May 2023, and with inflation projected to stay moderate, the central bank signalled that it aimed to maintain a stable growth trajectory. According to TA Research, most banks have announced a corresponding 25 bps reduction in their base rate, base lending rate or financing reference rate. 'While we reiterate that the recent OPR cut may exert mild pressure on bank earnings due to softer net interest margins, we see the impact as manageable, especially with support from the statutory reserve requirement cut,' the research house explained. It added: 'We also foresee lower borrowing costs to help lift sentiment and encourage lending, although overall loan growth is expected to moderate slightly due to ongoing cost-of-living pressures and weaker external sentiment. 'Importantly, lower rates may also ease asset quality risks by improving borrowers' cash flow and repayment capacity.' TA Research maintained its 'overweight' call on the banking sector, keeping its 2025 loan growth forecast at 5.7%. Its top stock picks in the sector include CIMB Group Holdings Bhd (target price: RM8.86), Public Bank Bhd (RM5.15), and Hong Leong Bank Bhd (RM23.59). The research house viewed the lower rate environment as providing offsetting benefits through improved sentiment and credit appetite, particularly in the consumer loan space. 'We assess the potential impact of loan growth by revisiting historical periods of OPR cuts to examine trends in residential mortgage and hire purchase loan growth,' it said. However, in contrast to housing, the automotive sector appeared less responsive to interest rate changes. 'Our analysis indicates that the impact on the automotive sector will be limited,' said TA Research. 'Based on car loan amounts ranging from RM34,580 to RM355,888 and repayment periods of five to nine years, the monthly repayment savings would only range between RM6 and RM67. 'This amount is unlikely to influence consumer purchasing decisions for vehicles significantly,' it added. TA Research cited historical data to support its view. It noted that despite a substantial OPR cut from 3.5% to 2% during the 2008/09 global financial crisis, total industry volume (TIV) saw a 2% decline in 2009. Similarly, during an economic slowdown in 2016, an OPR reduction also failed to bolster auto sales, and during the Covid-19 pandemic in 2020, TIV dropped 12.4%, with recovery driven more by tax incentives than rate cuts. As such, TA Research maintained a 'neutral' stance on the automotive sector, with a 'sell' rating on MBM Resources Bhd (target price: RM4.31) and Bermaz Auto Bhd (RM0.75), while Sime Darby Bhd (RM1.66) was rated 'hold'. For the property sector, the lower OPR translated into better affordability and project viability. Assuming banks fully pass on the rate cut, TA Research said, a 25-bp cut could decrease monthly instalments for a 35-year mortgage by 3.2%. This could nudge undecided buyers off the sidelines, particularly in the mid-market and mass segments. TA Research maintained its 'overweight' call on the Malaysian property sector heading into the second half of 2025. 'The sector is well positioned to benefit from a confluence of structural and policy-driven tailwinds,' it said. The research house's top 'buy' picks include Sime Darby Property Bhd (target price: RM2.05) and IOI Properties Group Bhd (RM2.78).
The Star
15-07-2025
- Business
- The Star
Distributive trade sales likely to grow
TA Research maintained a positive outlook on consumer activity. PETALING JAYA: The economy is expected to remain underpinned by resilient private consumption in the second half of 2025, despite a moderation in distributive trade momentum and global uncertainties, according to analysts. While growth in the distributive trade index (DTI) softened slightly in May, economists projected that favourable labour conditions, targeted policy measures and a recent interest rate cut would continue to support household spending and cushion downside risks to gross domestic product (GDP) growth. Malaysia's DTI expanded by 4.1% year-on-year (y-o-y) in May 2025 to 163.3 points, easing from April's 4.3% y-o-y growth. Distributive trade sales rose 4.4% y-o-y, also moderating from 4.7% in the preceding month. TA Research noted that the April-May DTI average of 4.2% y-o-y represented a marginal moderation from 4.3% y-o-y in the first quarter (1Q), suggesting 'a normalisation in spending patterns following steady momentum'. Nonetheless, the research house maintained a positive outlook on consumer activity, stating: 'We maintain the view that private consumption will remain resilient, underpinned by a favourable labour market, steady income gains and benign inflationary pressures, all of which support household purchasing power.' It added that Malaysia's Asean Chairmanship in 2025 could provide an additional uplift through heightened international engagements. 'These activities could spur urban consumption, particularly within the hospitality, transport and retail sectors, creating a positive spillover effect on domestic demand,' it said. TA Research forecasts private consumption expenditure (PCE) to grow by 4.7% y-o-y in 2Q25, slightly below the 5% y-o-y registered in 1Q25, due to a high base. Consequently, it expects GDP growth to moderate to 4% y-o-y in 2Q25 from 4.4% y-o-y in 1Q25. The recent 25-basis-point (bps) cut in the overnight policy rate (OPR) to 2.75% is expected to provide further stimulus. TA Research said: 'The recent 25-bps cut in the OPR is expected to reduce borrowing costs for households and businesses, making loans like mortgages, hire purchase and personal financing more affordable.' It cited a historical precedent, stating that a similar cut in 2016 had lifted GDP and PCE modestly in the subsequent quarter. BIMB Research, meanwhile, revised its 2025 distributive trade sales growth forecast downward from 6% to 5.2%, citing lacklustre motor vehicle sales. Nonetheless, the firm remained upbeat on the wholesale and retail trade segments, maintaining growth projections of 5% and 6.6%, respectively.
The Star
15-07-2025
- Business
- The Star
Oxford Innotech's earnings set to rebound in FY26
PETALING JAYA: Integrated engineering solutions provider Oxford Innotech Bhd is expected to see a rebound in earnings from financial year 2026 (FY26) onwards following a temporary slowdown in FY25 due to a high base effect from earlier project recognitions. In a report, TA Research forecasts that the group's earnings will register a 15.4% year-on-year (y-o-y) decline in core net profit to RM13.3mil in FY25. This comes after a sharp jump in earnings in FY24, which saw its core profit surge 104.6% y-o-y to RM15.7mil on the back of higher modular building system orders. However, earnings are expected to recover in FY26 and FY27, supported by its business expansion plan and a healthy industry outlook. 'We believe the group will recover in the subsequent years, with a projected earnings growth of 9.5% and 14.3% to RM14.6mil and RM16.7mil for FY26 and FY27, respectively,' said the research house. Oxford Innotech is scheduled to list on the ACE Market of Bursa Malaysia on July 29, 2025. Its initial public offering (IPO) comprises 143.46 million new shares with an offer for sale of 50 million shares at an issue price of 29 sen a piece. Upon listing, the group is expected to be valued at a market capitalisation of RM205.9mil. Expected to raise RM41.6mil from the IPO exercise, more than half of the proceeds will be allocated to the construction of a new factory at RM23.1mil. The remainder of the proceeds will be put aside for the purchase or refinancing of new machinery, general working capital and estimated listing expenses of RM11.17mil, RM3.33mil and RM4mil, respectively. Additionally, the group's future plans include the expansion of its product offering and customer base, as well as the expansion of production capacity and capabilities. The construction of phase 2 of its Factory 2 at Penang Science Park will add about 68,000 sq ft of manufacturing space for the group. 'Post-listing with the utilisation of IPO proceeds, the balance sheet is expected to improve from a net debt of RM16.9mil to a net cash position of RM16.8mil,' said TA Research. Furthermore, Oxford Innotech currently does not have any formal dividend policy. The research house assigned a target price-to-earnings multiple of 14 times to the group and arrived at a fair value of 29 sen per share, citing Oxford Innotech's established track record, ability to offer a wide range of products and services, as well as its experienced team.
