Analyst reaffirms DRB-Hicom forecasts after profit rebound
KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) has maintained its earnings forecasts for DRB-Hicom Bhd after the group returned to profitability in the first quarter ended March 31, 2025 (1Q25), driven by stronger sales and improved cost efficiency.
"The results were in line with our estimates but fell short of consensus, representing 22.6 per cent and 19.3 per cent of full-year forecasts, respectively," the research house said in a note.
PublicInvest reaffirmed its 'Neutral' call on the counter with an unchanged sum-of-parts-based target price of RM0.84.
DRB-Hicom posted a net profit of RM17.7 million for the quarter, reversing three consecutive quarters of losses.
Excluding non-recurring items, core net profit is estimated at RM28.9 million, reflecting a stronger underlying performance.
The improvement was supported by better cost control and healthier sales across most business segments, underscoring the group's operational turnaround.
Looking ahead, PublicInvest cautioned that heightened competition, particularly from competitively priced Chinese carmakers, could pressure margins and pose challenges to earnings growth.
It also noted that Malaysia's automotive sector is expected to normalise in 2025 after a record-setting year in 2024.
The Malaysia Automotive Association reported a five per cent year-on-year decline in total industry volume for the first four months of the year, with full-year sales projected to ease 3.5 per cent to 780,000 units.
PublicInvest said the anticipated softer demand is partly due to the easing of order backlogs and a potential increase in excise duties for completely knocked-down vehicles.
Other contributing factors include the rollout of targeted RON95 fuel subsidies, and the introduction of a high-value goods tax.
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