HEIM: Earnings Outperform on Strong Margins, Investment Bank Reiterates ‘Buy’
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates that the company’s financial results broadly met expectations, propelled by robust profit margin expansion. Despite some top-line challenges, strong operational efficiency led to a significant sequential improvement in net profit, prompting TA SECURITIES to maintain its “BUY” recommendation.
Performance Review
For the first nine months of fiscal year 2025 (9M25), the company reported flat year-over-year revenue at MYR2bn. Net profit for the period, however, saw a slight decrease of 2% year-on-year, totaling MYR318m. This dip was largely attributed to normalization from a low base in the prior year’s period and softer consumer sentiment.
A notable turnaround was observed in the third quarter of 2025 (3Q25), with net profit surging by 36% quarter-on-quarter to MYR113m. This impressive rebound was supported by a 22% increase in 3Q25 revenue to MYR656m, signalling improved consumer sentiment. Furthermore, the pre-tax profit (PBT) margin expanded to a record-high of 22.7% in 3Q25, underscoring the effectiveness of cost optimisation and strategic price increases implemented by management.
Future Outlook and Strategic Drivers
Looking ahead, the company anticipates an initial surge in volumes in October 2025, ahead of an expected excise duty hike in November 2025. This hike is expected to temper volume growth in the immediate term. To mitigate potential slowdowns, management plans to intensify marketing efforts, introduce value promotions, and leverage the government’s “Visit Malaysia Year 2026” initiative to boost tourist arrivals.
Profit margins are projected to remain elevated, buttressed by the August 2025 price increase, continuous efficiency gains, and favourable input costs and foreign exchange rates. Additionally, sustained efforts to clamp down on contraband trade are expected to contribute positively to the company’s performance, ensuring the continuation of its generous dividend payouts.
Investment Rating
TA SECURITIES has maintained its “BUY” recommendation for the company, setting a target price of RM0.25. This target price represents a potential upside of 25.0% from the last traded price of RM0.20, reflecting the investment bank’s confidence in the company’s strategic initiatives and future earnings potential.
