Latest news with #RM9bil
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
19-05-2025
- Business
- The Star
Sabah rubber sector set for revival
Symbolic start: Ahmad Zahid at the launch of the Pekebun Kecil Makmur programme in Tenom. — Bernama KOTA KINABALU: Sabah's rubber industry is set for a revival, with efforts to transform it from a 'sunset industry' to a 'sunrise sector' with solid plans under the Rural and Regional Development Ministry. Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, who also heads the ministry, said the initiative spearheaded by the Rubber Industry Smallholders Development Authority (Risda) aims to modernise the industry by establishing high-tech rubber depots, promoting value-added production, and introducing advanced tapping techniques to boost smallholder incomes and secure the sector's long-term viability. 'This is about creating a sustainable future for our smallholders. 'We want to transform the rubber industry into a sunrise sector that can generate high value, create jobs and provide long-term economic stability for Sabah,' he said at the launch of the Pekebun Kecil Makmur programme in Tenom yesterday. To ensure Sabah's smallholders have a stronger voice at the national level, Ahmad Zahid also announced the appointment of Datuk Seri Bung Moktar Radin as the national honorary adviser for Risda. Bung, who is also Sabah Umno chief and Kinabatangan MP, will serve as the voice for smallholders, ensuring their concerns are heard and addressed, he said. Ahmad Zahid noted that Sabah, with the largest rubber plantation area in Malaysia, covering 202,536ha or 25.69% of the country's total, should be a priority in national development plans. As part of this transformation, he proposed the construction of high-tech rubber depots in Sabah to enhance downstream activities and create new income streams for smallholders. 'These depots should be built in Sabah, and funding should not be a concern as Risda already has the necessary allocations,' he said. Ahmad Zahid also highlighted the potential of Risda Fuel, a technology that converts 1kg of scrap rubber into five litres of biodiesel. Successfully tested, he said this innovation could provide smallholders with a valuable new product line. Ahmad Zahid called for more youth involvement in the rubber sector, urging Risda to modernise production and expand training opportunities through Technical and Vocational Education and Training programmes. 'Young people should be trained, not just as tappers, but as value creators in the rubber industry,' he said. To further diversify the sector, Ahmad Zahid suggested turning Tenom into a furniture manufacturing hub, leveraging rubberwood from older trees to create high-value products. He estimated that if 40,000ha of rubber trees were replanted annually, the sector could generate up to RM9bil a year. At the event, a RM9.97mil allocation for smallholders was announced, to be managed by Keningau Risda. The funds will cover four key components: the replanting and supply programme (RM8.23mil), entrepreneurship and special programmes (RM1.2mil), the extension programme (RM206,000), and the productivity programme (RM331,000). This is part of the RM42.23mil set aside for Risda in Sabah under the national budget for 2025, aimed at boosting the overall welfare and economic resilience of smallholders across the state.
