Latest news with #PublicInvest
New Straits Times
a day ago
- Business
- New Straits Times
PublicInvest initiates HE Group at 'Neutral', sets target price at 37 Sen
KUALA LUMPUR: PublicInvest Research has initiated coverage on HE Group Bhd, an electrical engineering service provider, with a "Neutral" rating and a target price of 37 sen. The target price is based on 12 times earnings per share for financial year 2026 (FY26), reflecting a 25 per cent discount to industry peers and the Kuala Lumpur Construction Index, given HE Group's smaller market capitalisation and lack of diversification in earnings. Listed on the ACE Market of Bursa Malaysia since Jan 30 last year, the company is currently seeking a transfer to the Main Market, aiming to elevate its corporate profile. The company specialises in power distribution systems for end-user premises and boasts an established client base, particularly among multinational corporations in the semiconductor, medical device and electronics manufacturing sectors. Despite its solid track record, HE Group has yet to secure a significant foothold in the data centre (DC) space, an area it is actively targeting. Leveraging its expertise in substation development and industrial power systems, the company is positioning itself to tap into Malaysia's growing DC industry, which is closely intertwined with the semiconductor sector. "The growing DC industry in Malaysia is expected to drive demand for advanced semiconductor chips, creating a connection between these two critical sectors that are important to HE Group. "Renewable energy (RE) sector also presents an emerging opportunity, as supportive government policies accelerate RE adoption, particularly driving interest in battery energy storage systems. "HE Group is able to leverage its expertise in power distribution system for the RE industry as its strong fundamental knowledge in energy delivery closely aligns with the technical demand for BESS projects," PublicInvest added. The firm expects a three-year net profit compound annual growth rate of six per cent for the period FY24 to FY27, driven by stable contribution from the electrical equipment hook-up and retrofitting and power distribution system segments. It currently holds an outstanding orderbook of RM68.7 million and is eyeing RM50 million in replenishment for FY25, with a tender book valued at RM675 million. PublicInvest, however, flagged several key risks, including the highly fragmented mechanical and electrical industry, intensifying competition and macro challenges stemming from global trade tensions and cyclical downturns in end-user industries. "We like HE Group's proven execution in the semiconductor space and believe its skillsets are transferable to the DC segment. "However, without clear visibility on job wins in new verticals and amid external headwinds, we are cautious in the near term," the firm said.
New Straits Times
3 days ago
- Business
- New Straits Times
AMMB on track for FY29 goals, says PublicInvest
KUALA LUMPUR: AMMB Holdings Bhd is on the right track to achieve its financial goals by the financial year 2029 (FY29), following a solid FY25 performance, Public Investment Bank Bhd (PublicInvest) said. AMMB hosted its Strategy Day on July 25, 2025, to provide updates since it unveiled the Winning Together 29 (WT29) strategy last year. To recap, WT29 outlines the main financial goals: a higher dividend payout, a lower cost-to-income (CTI) ratio of 40 per cent and an improved return on assets (ROA) of 1.1 per cent. Accoriding to PublicInvest, AMMB is targeting a five-year FY24 to FY29 net profit of eight per cent, underpinned by key initiatives across its core segments. Featured Videos This includes a six per cent compound annual growth rate (CAGR) for loans and deposits, with small and medium enterprises (SMEs) and mid-sized corporations leading its lending growth, the research firm said. "Retail banking (RB) is expected to be the net funder of the group. Liability management and change in lending mix are expected to support net interest margin (NIM) expansion," it said. Notably, AMMB delivered a strong net profit growth of 7 per cent, improved ROA to 1.02 per cent and raised its dividend payout ratio to 50 per cent. While concerns with regard to slowing economic prospects may emerge in the second quarter (Q2) of FY26 onwards, PublicInvest thinks that AMMB's sound asset quality with sufficient overlays of RM439 million. Meanwhile, it said the group's solid loan loss coverage (LLC) buffer should help to mitigate the negative impact. "We retain our Neutral call and RM5.50 target price," it added.
New Straits Times
16-07-2025
- Business
- New Straits Times
Rising regulatory risks may force planters to scale back in Indonesia
KUALA LUMPUR: Rising regulatory risks in Indonesia could prompt some plantation companies to scale down or exit their operations over the longer term following a wave of large-scale land seizures, Public Investment Bank Bhd (PublicInvest) said in a recent note. Last week, Indonesian authorities confiscated 394,547 hectares of plantation land spanning Central Kalimantan and Riau, as well as North and South Sumatra. The land, previously controlled by 232 companies, has been transferred to Agrinas, a state-owned company established in early 2025 under the administration of President Prabowo Subianto. The operations were carried out jointly by the Ministry of Environment and Forestry, Ministry of Defence, and the Attorney General's Office. The task force has set a target to reclaim up to three million hectares of plantations deemed illegally operating within forest areas by August. With the latest seizures, Agrinas now controls approximately 833,000 hectares of plantation land, making it one of the largest plantation operators globally. With this latest addition, the total plantation area under the Agrinas Group now stands at 833,000 hectares, making the company one of the largest plantation firms in the world. Based on PublicInvest's channel checks, several local plantation companies have surrendered a small portion of their plantation land to the Indonesian authorities. "We understand that the impact on their earnings is largely muted. However, this development raises regulatory risks for industry players with significant exposure in Indonesia, which could weigh on their valuations over the long term," it noted. The firm also views this as a potential long-term environmental, social and governance risk. Furthermore, PublicInvest said investment in replanting activities is expected to be more cautious, as it may compromise the companies' interests. The firm added that it is also concerned the military-led enforcement in plantations could exacerbate the declining trend in Indonesian palm production, as there are doubts over the state's ability to manage these plantations effectively. "Based on our rough forecast, if 50 per cent of the entire seized 833,000 hectares plantation remains unproductive, the annual palm oil production could decline by about four per cent or 1.7 million metric tonnes," it said. Meanwhile, PublicInvest said the recent surge in crude palm oil prices to over RM4,200 per metric tonne may reignite investor interest in plantation counters. The firm has maintained a neutral outlook with a full-year crude palm oil price forecast of RM4,200 per metric tonne.
New Straits Times
30-06-2025
- Business
- New Straits Times
Gamuda's outlook positive on strong project pipeline: analysts
KUALA LUMPUR: Gamuda Bhd's outlook remains upbeat, supported by a robust project pipeline, according to analysts. Hong Leong Investment Bank Bhd (HLIB) said that despite some delays in converting contracts and minor challenges in its bid for the Suburban Rail Loop (SRL) systems package, Gamuda's order book is still expected to grow to between RM40 billion and RM45 billion by the end of the year. HLIB also highlighted that the company has recently been shortlisted for more projects, including New Zealand's Northland Corridor highway. "Gamuda is optimistic of prospects in Taiwan as the award timing of the RM11 billion rail extension could come earlier than expected. "Accounting for the SRL systems setback, Gamuda's high certainty pipeline remains massive at more than RM25 billion. "Further to this, we view the recent conclusion of Australian GE as reinforcing renewables' growth trajectory which bodes well for its existing pumped hydro ECIs (worth RM5 billion each)," it said. Meanwhile, Public Investment Bank Bhd (PublicInvest) noted that Gamuda's year to date project wins have reached RM15.8 billion, with its current outstanding construction orderbook estimated at RM34.6 billion. It said the jobs pipeline remains encouraging, with an additional RM15-20 billion new wins expected by end of calendar year 2025 (CY25), spanning water infrastructure, data centers (DC), renewables, and other key projects across Malaysia, Australia, and Taiwan. "On the property front, unbilled sales are now estimated at RM7.7 billion, with a RM5 billion sales target for FY25. "Regarding the data centre (DC) pipeline, Gamuda's DC partners indicated no plans to slow down or delay rollouts, and negotiations for additional DC projects are progressing well," it said. Gamuda reported a stronger quarter in the third quarter (Q3) financial year 2025 (FY25), with core net profit reaching RM246.8 million, mainly driven by improved performance in its domestic engineering & construction (E&C) division. However, PublicInvest said the cumulative nine month FY25 core net profit of RM664.5 million came in below both the firm's and consensus expectations, accounting for only 66.2 per cent and 63.8 per cent of respective full year estimates. It said the shortfall was primarily due to slower than expected earnings recognition from its overseas construction and property projects. "That said, we keep our earnings forecasts unchanged, as we expect Gamuda's performance to catch up in the final quarter, which has historically been its strongest. "We remain optimistic about its prospect, supported by encouraging project pipeline, and maintain our Outperform call on Gamuda with unchanged target price of RM5.30," it added.
New Straits Times
27-06-2025
- Business
- New Straits Times
Poh Huat earnings under pressure amid cost surge, tariffs
KUALA LUMPUR: Furniture manufacturer Poh Huat Resources Holdings Bhd is likely to see softer near-term earnings, weighed down by persistent inflation, rising operating costs, and the appreciation of the ringgit, according to Public Investment Bank Bhd (PublicInvest). The company's key export market, the United States, has seen buyers take a cautious stance after having front-loaded orders in anticipation of higher tariffs. "This is worsened by the fact that customers are now adopting a wait-and-see strategy after they had front-loaded orders ahead of higher tariff implementation. "On a positive note, a slight rebound in office furniture orders is expected next quarter, as some customers have confirmed orders and are expediting their shipments within the 90-day tariff grace period," it said. PublicInvest has also revised Poh Huat's financial year 2025 to 2027 (FY25-FY27) earnings forecast downwards by approximately 20-50 per cent. It said this is to factor in the persistent inflationary pressures, rising operational costs and global trade uncertainties stemming from the imposition of import tariffs by the US. The firm has maintained an "Underperform" call on Poh Huat, with a lower target price of RM0.90 from RM1.16 previously. Poh Huat's headline net profit for the second quarter (2Q) of FY25 declined by 92.0 per cent year-on-year (YoY) to RM0.6 million. The sharp decline was attributed to lower orders and shipments of office furniture from its Malaysian operations, higher material and labour costs, and a decline in net other income due to a foreign exchange loss of RM1.9 million, compared to a gain of RM2.3 million in the same quarter last year. Excluding non-operating items, Poh Huat's first half (1H) of FY25 core net profit of RM10.9 million came in below PublicInvest's and consensus estimates at 28.7 per cent and 32.8 per cent of full-year forecasts, respectively. "The discrepancy in our forecast was mainly due to the lower-than-expected contribution and higher operating costs from the Malaysian operations," PublicInvest noted. The group's revenue also declined to RM98.3 million in 2Q25, mainly due to reduced office furniture shipments from Malaysia, as customers had front-loaded orders ahead of the second presidency of Donald Trump and anticipated trade barriers. Its home furniture shipments from Vietnam also remained weak, with some US customers holding back orders in April 2025 due to new import tariffs. Nevertheless, Poh Huat had declared a second interim dividend of two sen for the financial period.
