DESCRIPTION
Malaysian conglomerate with three key divisions: (i) automotive; (ii) services; and (iii) property development. Key companies within the group include PROTON, Bank Muamalat, Pos Malaysia and Puspakom.
SHARE PRICE CHART
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns (%) | -6.9 | -6.9 | -15.1 |
| Relative Returns (%) | -2.9 | -1.7 | -12.2 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 1,652.9 |
| No. of Shares (m) | 1,933.2 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| EtikaStrategi | 55.9 |
| Employees Provident Fund | 7.3 |
DRB-Hicom’s (DRB) wholly-owned subsidiary, Composites Technology Research Malaysia Sdn Bhd (CTRM), is acquiring the entire equity interest in Spirit Aerosystems Malaysia Sdn Bhd (Spirit MY) at an enterprise value of USD95.2m (RM426.1m) on a debt-free and cash-free basis. We view this deal positively, as it is expected to bolster CTRM’s competitiveness in the aerospace sector. Based on our estimates, this could lead to a ~16% increase in our FY26-27F earnings forecast, factoring in additional funding cost from external debt. That said, we keep our earnings forecast unchanged pending the completion of the acquisition, likely to be by 4Q 2025. Our Neutral call on DRB remains unchanged, with an unchanged sum-of parts (SOP) based TP of RM0.84.
- The proposed acquisition. CTRM, a wholly-owned subsidiary of DRB, announced that it has entered into a conditional share purchase agreement with Spirit AeroSystems Inc and Spirit AeroSystems International Holdings inc. to acquire the entire equity interest in Spirit MY. The purchase consideration will be based on an enterprise value of USD95.2m (RM426.1m), adjusted for net working capital, cash and indebtedness. The proposed acquisition tentatively expected to be completed by 4Q 2025.
- CTRM specialises in the design, development, and manufacturing of composites components for the aerospace industry. The company’s core operations involve producing advanced aircraft composite parts that are supplied to major aerospace systems providers including Spirit AeroSystems, Collins Aerospace, and GKN Aerospace. These components ultimately reach leading aircraft OEMs such as Airbus, Boeing, Bombardier, and Embraer through CTRM’s tier-one customers.
- Rationale. The proposed acquisition will strengthen CTRM’s market position in the aerospace manufacturing by expanding its aerostructure capabilities through increased operational scale, strengthening supply chain influence and opening new growth pathways. Furthermore, this acquisition aligns with and supports Malaysia’s national industrial development goals, particularly The New Industrial Master Plan 2030, and The Malaysian Aerospace Industry Blueprint 2030, both of which aim to establish the country as a premier aerospace hub in the region.
- Financial impact. The proposed acquisition appears fairly valued at price to book of 0.63x and P/E ratio of 6.0x based on historical FY24 profit after tax of RM70.1m. The transaction will be fully debt-funded. Based on our estimates, the acquisition could increase our FY26-27 earnings by ~16%. DRB’s FY26F net gearing is estimated to increase modestly from 0.98x to 1.02x post acquisition.
KEY FORECAST TABLE
| FYE Dec (RM m) | 2023A | 2024F | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 15,850.5 | 16,190.8 | 15,925.4 | 16,721.7 | 17,223.3 | 2.8% |
| Operating Profit* | 635.0 | 510.1 | 522.8 | 612.5 | 700.9 | 3.3% |
| Pre-tax Profit* | 446.9 | 247.4 | 272.8 | 365.9 | 458.2 | 0.8% |
| PATAMI* | 238.9 | 22.6 | 127.7 | 196.9 | 265.5 | 3.6% |
| EPS (Sen) | 12.4 | 1.2 | 6.6 | 10.2 | 13.7 | — |
| P/E (x) | 6.5 | 68.6 | 12.4 | 8.0 | 6.0 | — |
| DPS (Sen) | — | — | — | — | — | — |
| Div Yield (%) | — | — | — | — | — | — |
Source: Company, PublicInvest Research estimates, *reported numbers – incl exceptional item
T 603 2268 3011
F 603 2268 3014
E research@publicinvestbank.com.my
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 15,850.5 | 16,190.8 | 15,925.4 | 16,721.7 | 17,223.3 |
| Cost of sales and operating expenses | -15,408.4 | -15,910.7 | -15,606.9 | -16,303.6 | -16,706.6 |
| Other income | 414.2 | 399.9 | 399.9 | 399.9 | 399.9 |
| Other expenses | -221.3 | -169.9 | -195.6 | -205.4 | -215.7 |
| Reported Operating Profit | 635.0 | 510.1 | 522.8 | 612.5 | 700.9 |
| Share of results in JVs and associates | 338.4 | 256.8 | 279.9 | 293.9 | 308.6 |
| Finance costs | -526.5 | -519.5 | -529.9 | -540.5 | -551.3 |
| Reported Pre-tax Profit | 446.9 | 247.4 | 272.8 | 365.9 | 458.2 |
| Income Tax | -52.5 | -141.6 | -65.5 | -87.8 | -110.0 |
| Effective Tax Rate (%) | 11.8 | 57.2 | 24.0 | 24.0 | 24.0 |
| Holders of perpetual sukuk | -28.4 | -37.2 | -27.7 | -27.7 | -27.7 |
| Minorities | -127.0 | -46.0 | -52.0 | -53.5 | -55.1 |
| Net Profit | 238.9 | 22.6 | 127.7 | 196.9 | 265.5 |
| Growth | |||||
| Revenue (%) | 2.2 | 2.1 | -1.6 | 5.0 | 3.0 |
| Operating Profit (%) | 11.8 | -19.7 | 2.5 | 17.2 | 14.4 |
| Core Net Profit (%) | -2.2 | -90.6 | 466.2 | 54.2 | 34.8 |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FYE Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 5,230.6 | 5,280.5 | 5,438.9 | 5,602.0 | 5,770.1 |
| Cash and Cash Equivalents | 2,024.5 | 2,133.9 | 2,115.4 | 2,091.3 | 2,113.5 |
| Receivables | 4,323.6 | 3,953.3 | 4,094.8 | 4,088.1 | 4,093.8 |
| Banking related assets/securities | 32,150.4 | 36,035.4 | 36,675.0 | 37,196.5 | 37,737.4 |
| Other assets | 14,860.3 | 14,860.8 | 14,494.7 | 14,414.6 | 14,325.7 |
| Total Assets | 58,589.3 | 62,263.9 | 62,818.8 | 63,392.4 | 64,040.5 |
| Payables | 4,840.9 | 4,350.2 | 4,450.2 | 4,550.2 | 4,650.2 |
| Borrowings | 7,198.5 | 7,278.9 | 7,319.6 | 7,361.4 | 7,404.3 |
| Banking related liabilities | 31,650.0 | 35,862.5 | 36,064.5 | 36,266.0 | 36,469.7 |
| Other Liabilities | 4,282.9 | 4,485.1 | 4,567.8 | 4,601.2 | 4,637.3 |
| Total Liabilities | 47,972.3 | 51,976.7 | 52,402.1 | 52,778.9 | 53,161.5 |
| Shareholders’ Equity | 10,617.1 | 10,287.2 | 10,416.6 | 10,613.6 | 10,879.0 |
| Total Equity and Liabilities | 58,589.3 | 62,263.9 | 62,818.8 | 63,392.4 | 64,040.5 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE Dec | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share (RM) | 3.9 | 3.9 | 4.0 | 4.1 | 4.2 |
| NTA Per Share (RM) | 2.9 | 3.0 | 3.1 | 3.2 | 3.4 |
| EPS (Sen) | 12.4 | 1.2 | 6.6 | 10.2 | 13.7 |
| DPS (Sen) | — | — | — | — | — |
| Payout Ratio (%) | — | — | — | — | — |
| ROA (%) | 0.4 | 0.0 | 0.2 | 0.3 | 0.4 |
| ROE (%) | 2.2 | 0.2 | 1.2 | 1.8 | 2.4 |
Source: Company, PublicInvest Research estimates
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document.
PIVB, Public Bank Berhad, our affiliates and related companies, directors, officers, connected persons/employees, associates or agents may own or have positions in the securities of the company(ies) covered in this document or any securities related thereto and may from time to time add or dispose of, or may be materially interested in, any such securities. Further PIVB, Public Bank Berhad, our affiliates and related companies, associates or agents do and/or seek to do business with the company(ies) covered in this document and may from time to time act as market maker or have assumed an underwriting commitment in the securities of such company(ies), may sell them or buy them from customers on a principal basis, may have or intend to accommodate credit facilities or other banking services and may also perform or seek to perform investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment advisory or other services from any entity mentioned in this document. The analyst(s) and associate analyst(s) principally responsible for the preparation of this document may participate in the solicitation of businesses described aforesaid and would receive compensation based upon various factors, including the quality of research, investor client feedback, stock pickings and performance of his/her recommendation and competitive factors. The analyst(s) and associate analyst(s) may also receive compensation or benefit (including gift and company/issuer-sponsored and paid trips in line with the Bank’s policies) in executing his/her duties. Hence, the addressee or any persons reviewing this document should be aware of the foregoing, amongst others, may give rise to real or potential conflicts of interest.
PUBLIC INVESTMENT BANK BERHAD (20027-W)
26th Floor, Menara Public Bank 2
78, Jalan Raja Chulan
50200 Kuala Lumpur
T 603 2268 3000
F 603 2268 3014
