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The Star
15 minutes ago
- Business
- The Star
IOI's upstream earnings to ride on strong CPO prices
PETALING JAYA: IOI Corp Bhd is expected to deliver stronger earnings in the coming financial years as it benefits from elevated crude palm oil (CPO) prices while pursuing fresh income streams through new ventures and mergers and acquisitions. The group is also targeting fresh fruit bunches (FFB) output growth and cost containment measures that could support margins going forward. According to RHB Research, which met with IOI Corp's management recently, the outlook remains positive as upstream earnings will continue doing well on strong CPO prices. This is further supported by the group's embarking on new ventures to diversify its income streams. The brokerage said the group's valuation was still appealing, trading at 17.5 times its forecast price-earnings ratio for 2026, at the lower end of the 17 to 22 times range of peers. On production, RHB Research noted that IOI achieved FFB growth of 1.3% year-on-year (y-o-y) in the financial year (FY) ended June 30, 2025, below its initial 3% target. 'While output saw a mini peak in April, IOI expects production to pick up again in July, with a bigger peak in August-September,' it said. For FY26, the group was targeting FFB output growth of 3-5% on the back of better weather conditions, in line with RHB Research's 4% forecast. The company was also expected to keep unit costs in check. 'IOI expects FY25 costs to come in at around RM2,000-RM2,100 per tonne (flattish y-o-y),' RHB Research said, adding that it had already secured fertiliser requirements for the first half of FY26 at flat prices y-o-y. However, a 2-3% rise in costs could result from minimum wage adjustments and Employees Provident Fund contribution requirements. On regulatory risks, RHB Research said IOI would face minimal impact from the government's sales and service tax (SST) and US tariffs. The group had obtained SST exemptions for its oleochemicals operations and over 90% of its trading volumes comprised CPO and palm olein, which were not subjected to the tax. 'There is no significant impact to IOI as 90% of Malaysian CPO production is exported to the European Union as certified products, with less than 2% exported to the United States,' it added. Looking ahead, IOI Corp was actively seeking brownfield upstream landbanks in Malaysia and Indonesia and opportunities in specialty oleochemicals for the pharmaceutical and personal care sectors. It also expressed excitement over its 33% stake in a pulp and paper joint venture with Nextgreen Global Bhd to turn oil palm empty fruit bunches into renewable products. 'The first phase of the plant (150,000 tonnes) should be operational by 2028, with potential earnings before interest and tax (ebit) contribution of RM30mil-RM50mil,' RHB Research said. The group's diversification efforts extended to coconut plantations, where 3,500 hectares had already been planted, targeting 4,600 hectares in total. This business could bring in RM60mil-RM70mil in ebit at full maturity. RHB Research reiterated its 'buy' call on IOI, maintaining a sum-of-parts-based target price of RM4.30 with a 2% environmental, social and governance premium.
Economic Times
a day ago
- Business
- Economic Times
Not just TCS: Q1 results destroy midcap IT's last standing heroes
The darling status of India's midcap IT companies is evaporating faster than their stock prices, as investors who fled largecap IT bellwethers for supposedly safer harbors discover there's nowhere to hide in the sector's brutal downturn. While Tata Consultancy Services (TCS) has grabbed headlines with its 12,000-employee layoff plan and share prices being down one-third from peak, the once high-flying midcap IT stocks, previously shielded by their growth engine reputation, are also nosediving. ADVERTISEMENT The Q1 earnings season proved to be a tough one for mid-tier IT companies, with most reporting topline misses that sent investors scrambling for the exits. Having lost about 10% in a week, Persistent shares are in bear grip and down about 24% from peak. Coforge shares have also lost about 7% of its value in the last one week alone. "Q1 results triggered a sharp stock correction for most of the mid-tier IT companies," said HSBC India's Yogesh Aggarwal. "Every company print was interesting, with some idiosyncratic take-away." The grim reality: even companies posting what appeared to be decent numbers couldn't escape punishment. Mphasis "finally reported a sharp decline in its top logistic client" but somehow also delivered "strong growth and extremely strong deal wins". Also Read | Trent, TCS shares worst Nifty performers in 2025. Why 2 Tata stocks are down at least 25% this year Capital intensity is spiking across midcap IT as companies leverage their balance sheets to win fixed-price contracts. Coforge sits at the epicenter of this debate, with its free cash flow to revenue conversion averaging a mediocre 5% in recent quarters. ADVERTISEMENT "Most companies are leveraging their balance sheets to offer better terms for fixed-price contracts," Aggarwal warned, highlighting how desperate the competition has cash conversion crisis isn't isolated to Coforge. Persistent has seen similar increases in contract assets leading to weaker cash conversion, while even Mphasis reported the troubling trend in Q1. ADVERTISEMENT Also Read | Explained: Why TCS firing 12,000 employees may be a canary in the mine and what it means for investors Despite the carnage, some analysts are doubling down on beaten-down names. Jefferies upgraded Mphasis to BUY, arguing that "the key overhang in logistics vertical is behind" and raising their price target to Rs3,100 based on "an improving growth outlook." ADVERTISEMENT For Coforge, Jefferies maintained its BUY rating with a raised price target of Rs2,030, expecting the company to deliver 23% EPS CAGR over FY26-28 despite current Vinit Bolinjkar, Head of Research at Ventura Securities, struck a more cautious tone: "The Q1 FY26 earnings season proved challenging for midcap IT companies in India, despite initial investor preference for them over large-cap IT firms." ADVERTISEMENT The pain isn't just domestic. Weak discretionary spending as clients in the US and Europe delay IT projects amid trade and inflation uncertainties is crushing revenue conversion. "Deal pipelines remained robust, their conversion into revenue was slow, particularly impacting sectors like manufacturing, auto, and consumer packaged goods," Bolinjkar explained.A notable trend this quarter was the role of cross-currency tailwinds, especially due to appreciation in currencies like the Euro and British Pound, which boosted reported USD revenue growth. 'However, this partly masked the underlying weakness in volume-led business. On the profitability front, operating margins came under pressure across most firms, driven by wage hikes, higher visa-related costs, and relatively soft topline growth. Despite this, some companies demonstrated effective cost control measures through higher utilization rates, reduced subcontracting, and disciplined hiring,' said noted Anil Rego, Founder & Fund Manager of Right Horizons sector's elevated valuations are becoming impossible to justify without an earnings upgrade cycle. "The Nifty IT index, encompassing many midcap firms, had surged significantly, trading at a premium to its long-term average," Bolinjkar observed. "Without a clear earnings upgrade cycle, these elevated valuations appear difficult to justify."Even after recent corrections, some midcap IT stocks might still be considered stretched given the current growth outlook, a sobering assessment for investors who thought they'd found safety in the sector's supposed growth engines.'The outlook for midcap IT in the next few months appears mixed, with potential for continued pressure but also some pockets of resilience. Q1 FY26 results indicate a subdued start for the Indian IT sector, a trend likely to persist for midcap players. Most IT firms are maintaining cautious guidance, with largecaps like Infosys revising its FY26 revenue growth guidance to a modest 1-3%, reflecting a challenging demand environment. The lack of clear guidance from some large players further underscores this cautiousness for midcap players,' Bolinjkar most companies remain guarded in their short-term outlook but are optimistic about a recovery in H2FY26, as client budgets stabilize and deferred projects start ramping sector appears to be in a consolidation phase, with performance divergence expected to continue across players, Rego sums it up. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
a day ago
- Business
- Time of India
Not just TCS: Q1 results destroy midcap IT's last standing heroes
The darling status of India's midcap IT companies is evaporating faster than their stock prices, as investors who fled largecap IT bellwethers for supposedly safer harbors discover there's nowhere to hide in the sector's brutal downturn. While Tata Consultancy Services ( TCS ) has grabbed headlines with its 12,000-employee layoff plan and share prices being down one-third from peak, the once high-flying midcap IT stocks , previously shielded by their growth engine reputation, are also nosediving. The Q1 earnings season proved to be a tough one for mid-tier IT companies, with most reporting topline misses that sent investors scrambling for the exits. Having lost about 10% in a week, Persistent shares are in bear grip and down about 24% from peak. Coforge shares have also lost about 7% of its value in the last one week alone. Explore courses from Top Institutes in Please select course: Select a Course Category Cybersecurity Design Thinking healthcare Digital Marketing Project Management Technology Management Leadership Product Management Finance MBA MCA Data Science Healthcare CXO Data Science Operations Management Others others Data Analytics Skills you'll gain: Duration: 10 Months MIT xPRO CERT-MIT xPRO PGC in Cybersecurity Starts on undefined Get Details " Q1 results triggered a sharp stock correction for most of the mid-tier IT companies," said HSBC India's Yogesh Aggarwal. "Every company print was interesting, with some idiosyncratic take-away." The grim reality: even companies posting what appeared to be decent numbers couldn't escape punishment. Mphasis "finally reported a sharp decline in its top logistic client" but somehow also delivered "strong growth and extremely strong deal wins". Also Read | Trent, TCS shares worst Nifty performers in 2025. Why 2 Tata stocks are down at least 25% this year Live Events Cash flow crisis? Capital intensity is spiking across midcap IT as companies leverage their balance sheets to win fixed-price contracts. Coforge sits at the epicenter of this debate, with its free cash flow to revenue conversion averaging a mediocre 5% in recent quarters. "Most companies are leveraging their balance sheets to offer better terms for fixed-price contracts," Aggarwal warned, highlighting how desperate the competition has become. The cash conversion crisis isn't isolated to Coforge. Persistent has seen similar increases in contract assets leading to weaker cash conversion, while even Mphasis reported the troubling trend in Q1. Also Read | Explained: Why TCS firing 12,000 employees may be a canary in the mine and what it means for investors What analysts say Despite the carnage, some analysts are doubling down on beaten-down names. Jefferies upgraded Mphasis to BUY, arguing that "the key overhang in logistics vertical is behind" and raising their price target to Rs3,100 based on "an improving growth outlook." For Coforge, Jefferies maintained its BUY rating with a raised price target of Rs2,030, expecting the company to deliver 23% EPS CAGR over FY26-28 despite current struggles. But Vinit Bolinjkar, Head of Research at Ventura Securities, struck a more cautious tone: "The Q1 FY26 earnings season proved challenging for midcap IT companies in India, despite initial investor preference for them over large-cap IT firms." The pain isn't just domestic. Weak discretionary spending as clients in the US and Europe delay IT projects amid trade and inflation uncertainties is crushing revenue conversion. "Deal pipelines remained robust, their conversion into revenue was slow, particularly impacting sectors like manufacturing, auto, and consumer packaged goods," Bolinjkar explained. A notable trend this quarter was the role of cross-currency tailwinds, especially due to appreciation in currencies like the Euro and British Pound, which boosted reported USD revenue growth. 'However, this partly masked the underlying weakness in volume-led business. On the profitability front, operating margins came under pressure across most firms, driven by wage hikes, higher visa-related costs, and relatively soft topline growth. Despite this, some companies demonstrated effective cost control measures through higher utilization rates, reduced subcontracting, and disciplined hiring,' said noted Anil Rego, Founder & Fund Manager of Right Horizons PMS. Valuation check The sector's elevated valuations are becoming impossible to justify without an earnings upgrade cycle. "The Nifty IT index, encompassing many midcap firms, had surged significantly, trading at a premium to its long-term average," Bolinjkar observed. "Without a clear earnings upgrade cycle, these elevated valuations appear difficult to justify." Even after recent corrections, some midcap IT stocks might still be considered stretched given the current growth outlook, a sobering assessment for investors who thought they'd found safety in the sector's supposed growth engines. 'The outlook for midcap IT in the next few months appears mixed, with potential for continued pressure but also some pockets of resilience. Q1 FY26 results indicate a subdued start for the Indian IT sector, a trend likely to persist for midcap players. Most IT firms are maintaining cautious guidance, with largecaps like Infosys revising its FY26 revenue growth guidance to a modest 1-3%, reflecting a challenging demand environment. The lack of clear guidance from some large players further underscores this cautiousness for midcap players,' Bolinjkar said. However, most companies remain guarded in their short-term outlook but are optimistic about a recovery in H2FY26, as client budgets stabilize and deferred projects start ramping up. The sector appears to be in a consolidation phase, with performance divergence expected to continue across players, Rego sums it up. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
The Star
a day ago
- Business
- The Star
Harn Len declares special dividend after strong 4Q
Harn Len's fourth-quarter net profit surged to RM22.5mil. PETALING JAYA: Harn Len Corp Bhd remains cautious and is actively formulating strategies to safeguard its business operations. The plantation group said these include enhancing efficiency and implementing cost rationalisation measures to mitigate potential negative impacts. Harn Len said crude palm oil (CPO) prices are currently hovering between RM3,900 and RM4,100 per tonne. 'A surge in soybean oil prices and high demand from India will help to support CPO prices, where the average CPO price for the year is forecast to remain above RM4,000 per tonne,' the company added. In its fourth quarter ended May 31, Harn Len's net profit surged to RM22.5mil, or earnings per share of 3.68 sen, from RM1.5mil or 0.27 sen, a year ago. This brought its full-year profit to RM33.4mil, or 5.75 sen. Quarterly revenue rose 39.3% to RM70.9mil from RM50.9mil, lifting full-year revenue to RM283.2mil. It declared a special dividend of three sen per share for its financial year ended May 31.
Straits Times
2 days ago
- Entertainment
- Straits Times
Chloe Chua and SSO's latest album hits No. 1 on Apple Music's classical music charts
Sign up now: Get ST's newsletters delivered to your inbox This is the second time an album by Chloe Chua and the Singapore Symphony Orchestra has topped Apple Music's classical music chart. SINGAPORE – Singaporean violinist Chloe Chua's new album Mozart: Violin Concertos has reached the No. 1 spot on Apple Music's global Classical Top 100 charts. The album, recorded with the Singapore Symphony Orchestra (SSO) under the baton of Hans Graf, also reached No. 5 on the United Kingdom's Official Specialist Classical Chart. The album was released on July 18. This is the second time Chua and the SSO have snagged the top spot. The first was in August 2024, with their recording of Butterfly Lovers Concerto & Paganini, which was released on July 26, 2024. The SSO has been steadily clocking new achievements with recordings and tours post-pandemic. In 2023, its recording of film composer Bernard Herrmann's Suite From Wuthering Heights: Echoes For Strings debuted at No. 5 on the UK's classical music chart , the first time it cracked the Official Specialist Classical Chart's coveted top five spots. Chua and the SSO bettered that achievement when Butterfly Lovers reached No. 4. The orchestra also went on a sold-out three-city tour in Australia in February. Singapore Symphony Group chief executive officer Kenneth Kwok says: 'This achievement is further proof that our national orchestra and Singapore classical music talents are gaining global attention, and able to compete on the international stage. 'We are especially proud of this recognition in a field that is dominated by orchestras with a much longer tradition and history. When we made the BBC Music Magazine's world's top orchestras list in 2022, we were one of the two youngest and only two Asian orchestras.' Mozart: Violin Concertos teams Chua with Chinese violinist Ziyu He, a fellow alumnus of the Yehudi Menuhin Competition. The recording includes Wolfgang Amadeus Mozart's Rondos, K. 269 and K. 373, as well as the Sinfonia Concertante, K. 364. In a four-starred review of the recording, British newspaper The Guardian noted that Chua holds attention with her 'notably mature' interpretations, which are 'balanced, considered and never trying too hard'. The review added: 'Everything Chua plays has a clean, focused tone, an unfailingly elegant turn of phrase and a quiet wit.' Chua will be performing Pyotr Ilyich Tchaikovsky's Violin Concerto with the SSO at the Esplanade Concert Hall on Aug 21 and 22. Tickets are sold out, but additional seats in the choir gallery have been released.
