Latest news with #CGSIResearch
The Star
2 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
- Business
- The Star
Malaysia's June inflation dips below projections at 1.1%
CGSI Research is maintaining its 2025 CPI forecast at 2% y-o-y. KUALA LUMPUR: Malaysia recorded a slightly slower rate of inflation in June as compared to the previous month, below economist expectations that there would be no change to the rate of consumer price increase. In June, the consumer price index (CPI) rose 1.1% as compared to 1.2% in May - representing the index's slowest rate of increase in 52 months. The June result showed a lower rate of inflation than that announced by regional peers, including Vietnam (3.6%), Indonesia (1.9%) and the Philippines (1.4%). South Korea registered a June inflation rate of 2.2%. However, the June CPI in China was 0.1% and negative-0.3% in Thailand. Malaysia's core inflation during the month was 1.8%, the same rate as in May. According to the National Statistics Department, the decrease in the cost of food at home by 0.4% helped to mitigate the rate of inflation in the food and beverages group, which has the largest weighting on the index. The agency also recorded a slower increase in June in restaurant and accommodation services (2.8%), recreation, sport and culture (0.8%), transport (0.3%) and furnishings, household equipment and routine household maintenance (0.1%). Groups that saw price increases at the same rate as in the previous month included education (2.2%), housing, water, electricity, gas and other fuels (1.7%), insurance and financial services (1.5%), and alcoholic beverages and tobacco (0.6%).
The Star
15-07-2025
- Business
- The Star
Econpile likely to surpass FY26 job-win target
PETALING JAYA: Piling specialist Econpile Holdings Bhd is expected to beat its new job wins target of RM400mil for its financial year ending June 30, 2026 (FY26) with the rollout of more government infrastructure, data centre, and industrial building projects, analysts say. Barely two weeks into its new financial year, analysts said the group is off to a good start with its second job win, a RM98.2mil contract from Eastmont Sdn Bhd to undertake bored piling works, basement construction and pile cap works within a proposed industrial development in Kapar, Klang. CGS International Research (CGSI Research) said in a report that with the new job, Econpile's FY26 new wins already total RM125mil, which is 31% of its target of RM400mil, bringing its order book to RM580mil as of last month. 'This is assuming revenue recognition of RM90mil in the fourth quarter of its FY25 (4Q25).' The gross profit margin for the latest project, which is estimated at 10%, is similar to Econpile's existing piling residential projects, the research house noted. On July 9, Econpile also announced a RM27mil piling and pile cap works contract from Bayu Melati Sdn Bhd for a proposed serviced apartment project with two 37-storey blocks in Selangor. CGSI Research said, 'More importantly, we believe the group's projects have no more lingering legacy issues.' Earlier this year, Econpile had faced some issues with a project in Mont Kiara, Kuala Lumpur, and road upgrading work in Pahang, which have since been gradually resolved. 'As such, we expect earnings to show some recovery in 4Q25, and then become more apparent in FY26 when recognition of most of its projects picks up steam,' the research house noted. CGSI Research reiterated an 'add' call on the stock with a target price of 46 sen per share. 'We like Econpile as a key beneficiary of a revival in government infrastructure spending as, according to the company, it has the largest number of bored pile machines in Malaysia currently.' Meanwhile, RHB Research said in a note to clients, 'Given that the majority of Econpile's contracts pertain to property development, the latest win indicates the group's comeback in the industrial space.' The research house estimated the group's current order book at RM570mil, while FY26 year-to-date job wins stand at RM125mil versus its full-year job win target of RM600mil. The group's tender book stands at about RM1bil, comprising jobs in both the private and public sectors. 'Profitability-wise, we expect the gross profit margin for this latest job to be between 5% and 8%,' it noted. RHB Research, which maintained a 'buy' call on Econpile, set a new target price of 48 sen per share. The research house added that the icing on the cake would come from the group's securing newer packages from infrastructure jobs with higher margins such as the Penang Light Rail Transit or the upcoming Johor Baru Elevated Autonomous Rapid Transit projects. The research house is also upbeat about the group's track record in infrastructure jobs compared with other piling contractors.
The Star
14-07-2025
- Business
- The Star
Banks poised for stable margins in second quarter
PETALING JAYA: Net interest margins (NIM) of local banks are likely to remain stable in the second quarter of 2025 (2Q25), with a slight increase expected, as they benefit from improved liquidity following Bank Negara's recent reduction of the statutory reserve requirement (SRR) from 2% to 1% effective May 16. Building on this, analysts estimate that the SRR cut has released about RM19bil in liquidity into the banking system. CGSI Research said banks could have benefitted from additional interest income earned from the funds released, potentially lifting banks' net interest income (NII) growth. 'With this, banks' NIM could be stable quarter-on-quarter (q-o-q) in 2Q25 with an upward bias. As a preview of 2Q25 financial results, we expect core net profit of banks under our coverage to come in at between RM9.2bil and RM9.3bil, slightly below the RM9.37bil recorded in 1Q25,' CGSI Research said in a report. The research firm said it was not overly concerned about the potential q-o-q upturn in loan loss provisioning (LLP) in 2Q25, as the credit charge-off rate is likely to remain low at about 15 basis points, which is below the pre-Covid-19 level of 25 basis points. As for loans, growth is expected to come in at 5% year-on-year (y-o-y) by end-June 2025, slightly lower than the 5.2% recorded at end-March. According to CGSI Research, loan growth in the banking sector showed a V-shaped pattern, easing to 5.1% y-o-y at end-April 2025 before recovering to 5.3% by end-May. This was driven by fluctuations in business loan growth, which slowed from 4.8% y-o-y in March to 4.6% in April, then picked up to 5% in May. In contrast, household loan growth remained steady at around 5.9% throughout the three months. Meanwhile, the research firm expects the gross impaired loan ratio to be around 1.45% at end-June 2025, roughly in line with 1.42% at end-March. Going back to 1Q25, CGSI Research said three banks, namely, Hong Leong Bank Bhd (HLB), Affin Bank Bhd and Alliance Bank Malaysia Bhd , had recorded double-digit y-o-y core net profit growth, which was primarily driven by lower LLP. Noteworthy too was that Malayan Banking Bhd delivered a record-high core net profit of RM2.59bil in 1Q25, thanks to a 17.9% drop in LLP. HLB's core net profit of RM1.35bil in 1Q25 was also an all-time high, but this was lifted by a RM399mil write-back in management overlay, said the research firm. Ongoing write-backs of management overlays by banks are the potential re-rating catalyst for the sector. This, along with expectations of higher dividend payout ratios by most banks, supports CGSI Research's 'overweight' rating on bank stocks.
The Star
08-07-2025
- Business
- The Star
WCT's order book forecast to grow this year
PETALING JAYA: WCT Holdings Bhd looks set for a more promising earnings trajectory through this year, as analysts turned increasingly positive following the property and construction group's RM365.2mil contract win last week to widen a section of the North-South Expressway in Johor. CGS International Research (CGSI Research) highlighted the significance of the award, describing it as its first win for this year and a potential turning point for the group's order book momentum. 'We reiterate 'add' for its compelling valuation of just 0.3 times 2025 price-to-book value, less than mean levels since 2015, and improving construction and property franchises,' the research house said. However, it lowered its target price to RM1.28 to reflect a smaller order book and enlarged share base after a placement exercise. MIDF Research also struck an upbeat tone, maintaining its 'buy' recommendation for WCT with a target price of 95 sen. 'This award further strengthens WCT's reputation as a seasoned player in highway and civil infrastructure projects and positions the group well to tap into upcoming public-sector packages including the Penang International Airport expansion and future highway corridor upgrades,' the research house said, noting the contract accounted for over one-third of WCT's job replenishment target of RM1bil this year. The 36-month project, awarded by Projek Lebuhraya Usahasama Bhd, covers site clearance, roadworks, bridge construction, and utility relocation work from Sedenak to Simpang Renggam, with work commencing towards the end of this month. With the contract win, WCT's construction order book is expected to rise by 14.6% to RM2.8bil. Kenanga Research welcomed the award as WCT's first major contract win this year, building on a RM249.7mil contract secured last year for the same highway stretch. The research house maintained its 'outperform' call for WCT, with a target price of RM1.25, citing the group's exposure to the impending rollout of various public infrastructure projects such as the Penang International Airport expansion project, Pan Borneo Highway, Subang Airport regeneration plan, and various government hospitals. Public Investment Bank Research said it expects the project to contribute about 2% to 4% annually to the group's earnings over the 36-month contract period' and noted that WCT's unbilled order book had grown 14.6% to RM2.8bil. It kept its 'outperform' rating and RM1.08 target price unchanged, adding the award fell within its order book replenishment assumptions. Beyond job wins, CGSI Research pointed to balance-sheet improvement as another rerating catalyst for WCT, following the listing of Paradigm-REIT and reduction in perpetual sukuk. 'We expect its balance sheet to improve to a net gearing of 0.5 times this year from 0.8 times at end-2024. This leaner balance sheet to be reflected when it releases its second-quarter (2Q25) results in August and serves as a rerating catalyst,' it said. MIDF Research noted that despite a seasonally soft 1Q25, the outlook remained encouraging. 'We have kept our earnings forecasts unchanged, in line with our expectations of stronger job flows ahead. This has been reinforced by the group's recent RM365.2mil contract win, which will progressively support earnings from 2026,' it stated. While WCT's earlier job replenishment pace had been sluggish, CGSI Research highlighted that it was now broadening tenders and aiming for projects including the Penang LRT, airport expansion, and Middle East civil infrastructure.
