| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading conglomerate has reported robust core earnings of RM141.0 million for its first quarter, aligning with both analyst and consensus full-year projections. The strong performance saw core net profit increase by 9.7% year-on-year (YoY), while overall revenue rose 4.1% YoY to reach RM1.2 billion, driven by improvements across both its manufacturing and property segments.
Performance Highlights
The manufacturing segment was a significant contributor to the positive results, with its quarterly Earnings Before Interest and Taxes (EBIT) jumping an impressive 49.6% YoY to RM46.3 million. This surge occurred despite a stable revenue of RM628.5 million (+0.4% YoY). The improved profitability was primarily attributed to a more favourable sales mix and enhanced operational efficiencies, including reductions in wastage and staff costs, as well as the implementation of technological advancements to streamline daily operations. These efforts culminated in a higher EBIT margin of 7.4% for the quarter, a notable increase of 2.4 percentage points YoY.
Concurrently, the property segment also demonstrated resilient growth, with its EBIT rising 8.3% YoY to RM158.0 million, supported by an 8.9% YoY increase in revenue to RM526.6 million. This performance was bolstered by a higher number of new launches across the Northern, Central, and Southern regions, alongside steady construction progress on ongoing projects. Management also noted encouraging responses to its maiden project in Jawi (Penang) and its first high-rise development in Seremban.
Outlook and Valuation
Looking ahead, property development is anticipated to remain the primary earnings driver. The group aims to achieve an average take-up rate of 70-80% across its projects in the fiscal year, with targeted property launches valued at RM3.0 billion, an increase from RM2.55 billion in the previous fiscal year. The company continues to hold a substantial landbank of approximately 11,000 acres, representing a potential gross development value (GDV) of RM53.0 billion.
For the manufacturing division, the focus remains on mitigating margin pressure stemming from intense global pricing competition. Strategies include lower input costs and product reformulation efforts, ensuring the segment’s EBIT margin is expected to remain resilient at approximately 6.0% in the current fiscal year. Analysts at TA SECURITIES have consequently raised their FY26-28F earnings estimates by 1.5%, factoring in recent corporate actions. The investment bank has maintained its ‘BUY’ recommendation on the stock, setting a target price of RM0.25.
