Latest news with #SpiritMalaysia
The Star
13 hours ago
- Business
- The Star
DRB-Hicom's latest buy a win
HLIB) Research said it is positive on the acquisition, as Spirit Malaysia's stable earnings are expected to strengthen DRB-Hicom's overall financial performance. PETALING JAYA: Analysts are cautiously optimistic on DRB-Hicom Bhd 's plans to acquire Spirit AeroSystems Malaysia Sdn Bhd, which is a key customer in the aerospace business. Hong Leong Investment Bank (HLIB) Research said it is positive on the acquisition, as Spirit Malaysia's stable earnings are expected to complement Composites Technology Research Malaysia Sdn Bhd's (CTRM) operations and strengthen DRB-Hicom's overall financial performance. CTRM is a wholly-owned subsidiary of DRB-Hicom. 'The indicative price-to-earnings (PE) valuation stands at seven times, aligning closely with DRB-Hicom's projected PE of 7.4 times for financial year 2026 (FY26) and 5.4 times for FY27. 'The deal is expected to yield a negative goodwill gain of RM223.2mil, while CTRM will eliminate RM12.7mil in profits related to unsold inventory. 'We anticipate an additional earnings contribution of around RM45mil per year – equivalent to approximately 21.5% of FY25 earnings and 15.4% of FY26 earnings,' the research house added. In an announcement to Bursa Malaysia on Monday, the conglomerate said it is paying US$109.8mil or RM491.3mil cash to take over Spirit Malaysia to strengthen its presence in the booming aerospace business, especially with the recent commitment by Malaysia and Indonesia in securing a new Boeing aircraft. The proposed acquisition is expected to be completed by the fourth quarter of 2025 (4Q25), pending shareholders and European and US regulators' approval. 'While we are positive on the acquisition exercise, we maintain our 'hold' recommendation with an unchanged target price of RM0.85,' it said. Meanwhile, Kenanga Research said it is maintaining its 'underperform' call on DRB-Hicom. Among others, it said: 'Our main concern is on the fluctuation of earnings post-takeover as Spirit Malaysia will be detached from the Spirit Group, thus losing fixed-margin arrangement (pre-takeover, it is under a cost-plus arrangement as any cost incurred is charged back with a fixed mark-up to the respective Spirit AeroSystems' entities). 'Post-takeover, Spirit Malaysia will be entering into supply agreements directly with Airbus and Boeing with no cost-plus arrangement,' the brokerage noted. DRB-Hicom reported an 81% decline in net profit in 1Q25 ended March 31, 2025 to RM17.7mil from RM91.5mil in the previous corresponding period. The decline was attributed to reduced revenue across major segments, coupled with higher depreciation and amortisation expenses. Meanwhile, revenue in 1Q25 slipped to RM4.11bil from RM4.33bil a year earlier.
The Star
2 days ago
- Business
- The Star
DRB-Hicom plans to acquire Spirit Malaysia
PETALING JAYA: DRB-Hicom Bhd plans to acquire the Malaysian operations of aerospace manufacturer Spirit AeroSystems – the world's largest standalone aerostructures company with an enterprise value of US$95.2mil. In a statement, the conglomerate said its wholly-owned subsidiary, Composites Technology Research Malaysia Sdn Bhd (CTRM) had entered into a conditional share purchase agreement with Spirit AeroSystems Inc and Spirit AeroSystems International Holdings, Inc. The acquisition is expected to be completed by year-end, making Spirit AeroSystems Malaysia Sdn Bhd (Spirit Malaysia) a wholly-owned subsidiary of CTRM. The purchase consideration is set to be fully satisfied in cash, which is expected to be funded through bank borrowings. Based on the latest audited consolidated financial statements for financial year 2024, Spirit Malaysia posted a profit after tax of RM70.1mil and net assets of RM770.5mil. According to DRB-Hicom, the acquisition represents a strategic opportunity to further enhance CTRM's competitive position in the aerospace industry by enhancing its aerostructures expertise. 'This would contribute towards improved scale, efficiency, and growth in various areas that would elevate CTRM's presence in key aerospace programmes,' the company said. The conglomerate added that it would also deepen its relationships with global original equipment manufacturers, while expanding CTRM's relationships with Airbus for its A220, A320, and A350 programmes, and with Boeing on the 737 and 787 programmes. 'At the same time, CTRM will enhance its presence across the supply chain and be better positioned for long-term competitiveness and sustainable growth in an increasingly challenging and dynamic aerospace market,' DRB-Hicom said. CTRM is known for developing and producing aircraft composites components for aerospace and non aerospace applications as well as offering a range of support services such as testing laboratory facilities, composites engineering and supplier management services. Spirit Malaysia supplies key components and other assemblies for Airbus and Boeing marquee programmes, including A220, A320/A321, A350, B737 and B787. In addition to its aerospace composite and metallic assembly expertise, it also provides engineering services, supply chain management services and shared services. Spirit Malaysia is also a key customer of CTRM, contributing 54.1% towards the latter's consolidated revenue for the financial year ended Dec 31, 2024. The acquisition followed news of Boeing receiving regulatory approval from the UK's Competition and Markets Authority for its planned acquisition of Wichita-based Spirit AeroSystems. According to reports, this meant investigations will not continue on to 'phase two'. Initial investigation began in June 2025 and had a deadline for the end of this month. The deal is reportedly expected to be completed in the fourth quarter of this year. At market close yesterday, DRB-Hicom's share price was 82 sen.
