Latest news with #RM1.35bil
The Star
6 days ago
- Business
- The Star
HLB's strong 3Q results offset dilution of stake in China bank
CGS International Research has raised its FY25 core earnings per share forecast by 14.8% to factor in the RM399mil writeback. PETALING JAYA: The RM407mil dilution loss that Hong Leong Bank Bhd (HLB) recorded for its stake in Bank of Chengdu Co Ltd (BoCD), in China does not overshadow the strong financial performance of the bank for its third quarter ended March 31, (3Q25). The bank experienced the dilution after its stake in BoCD fell to 17.8% from 19.8% following the latter's move to complete the conversion of its convertible bonds into new ordinary shares, following an early redemption process concluded in February. 'This dilution loss came about after BoCD's minority shareholders exercised their convertible bonds (C-bonds) at a lower share price. 'The price differential forms the basis of the dilution impact. As a result, HLB now has a reduced stake in BoCD, which is still worth RM9bil. No further conversions of this scale are expected. 'Further dilutions, if any, will be extremely minor, and will come from either placements or rights issues,' MIDF Research stated in a report following HLB's result filings. The bank posted core net profit of RM1.35bil in 3Q25, up by 18% quarter-on-quarter (q-o-q) due mainly to the large writeback of its RM399mil management overlay. For the nine-month period (9M25) HLB's core net profit beat analysts expectations and was up 14% year-on-year to RM3.59bil on improved net interest income and non-interest income, aside from the overlay writeback. On the issue of the overlay, MIDF Research said the move brings HLB's loan loss coverage (LLC) rate down to 85% from 139% and leaves RM175mil worth of overlays remaining. 'Management is comfortable with the current LLC level, so we don't expect any major overlay allocations as the current gross impaired loan (GIL) ratio is to be maintained with only a few one-off impairments expected in overseas markets,' MIDF Research said. It maintained a 'buy' call on the bank with a revised target price of RM23.09 a share from RM22.10. Meanwhile, CGS International Research, which has HLB as its top pick for the sector with a target price of RM30.70 a share down from RM31.40, has raised its FY25 core earnings per share (EPS) forecast by 14.8% to factor in the RM399mil writeback. It also reduced its projection for associate contributions from BoCD by 10% for FY26 to FY27 to reflect the dilution of HLB's stake in the Chinese bank, leading to a 2% drop in its FY26 to FY27 EPS estimates. UOB Kay Hian Research said that, with HLB's capital ratio improving, it foresees a gradual increase in the dividend payout ratio from 35% in FY24 to 40%, 45%, and 50% for FY25 to FY27, implying a 4% to 6% yield over the period. It also has maintained its 'buy' call on the bank with a higher target price of RM23.80 a share from RM23.60.
The Star
22-05-2025
- Business
- The Star
Inari in search growth prospects amid challenges to RF segment
PETALING JAYA: Inari Amertron Bhd is looking for growth beyond its flagship radio frequency (RF) division as the outlook for this is subdued. Analysts have come out cautious post a briefing on the company's third quarter ended March 31, 2025 (3Q25) performance, which came in below expectations. Inari's normalised net profit for 3Q25 fell 11.5% year-on-year to RM57.9mil, while revenue was down 11.3% to RM308.3mil. This was due volume loading weakness across all business segments. Inari Amertron is the biggest semiconductor player locally. It is one of US-based Broadcom Inc's top third-party packaging and testing services providers in the thriving wireless segment. CIMB Securities Research said during the briefing, Inari indicated a subdued growth outlook for RF content gains tied to next-generation smartphone launches in the second half of 2025. "Any potential upside in RF value is expected to be driven more by market share gains from competitors and the introduction of new processes, rather than new socket wins. "We also gather that RF utilisation slipped to around 65% in 3Q25, down from 75% in 2Q25. Nonetheless, the group expects similar volume loadings in 4Q25," the research firm said in a report. According to CIMB Research, Inari is targeting financial year 2025 (FY25) revenue of RM1.35bil (based on mid-point guidance), implying flat quarter-on-quarter sales in the final quarter. Additionally, Inari does not foresee any front-loading activities boosting near-term utilisation, as its key RF customer is maintaining a steady volume loading forecast for the upcoming quarters. Despite challenges in the RF segment, Inari remains optimistic with growth prospects to be driven by memory module, power management, and automotive MCU testing programmes. "We expect these initiatives to contribute between RM80mil and RM100mil in revenue, making up about 6% of total FY26 sales. Inari's first memory product has already entered high-volume manufacturing, achieving a high yield rate and improved throughput, which bodes well for future contributions. "For example, the group expects to raise its memory module production volume by 33% in 4Q25F Additionally, the company is actively working to secure qualifications for new products in the coming quarters, further strengthening its diversification efforts," added the research firm. It is also working to optimise production at its 55%-owned China-based subsidiary, Yiwu Semiconductor International Corp by expanding its product portfolio to include advanced packaging solutions tailored for the domestic market. CIMB Research has kept its Buy call and RM2.20 target price on the stock. On the other hand, Maybank Investment Bank (Maybank IB) Research is maintaining its Hold stance, citing muted near-to-medium term prospects. It said a "significant positive shift in demand is needed for us to re-rate the stock". The research firm said plans to move up the value chain in its sensor business which should bode well for future prospects. "Its existing key customer in the segment has plans to aggressively grow into new generic sensor segments and redesignate some China-for-China products to Imari. However, its Yiwu factory has yet to yield positive new product initiative results with management alluding that its facility there may undergo restructuring to enhance yield," said Maybank IB Research, which has a RM2 target price on the stock. Shares of Inari was trading at RM1.87 at the time of writing, down 13.43% in the past five days.
