| Key Metric | Value |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company has reported its Full-Year 2025 (FY25) results, which largely met market expectations. Core earnings for the fiscal year reached RM530.8 million, aligning closely with both the investment bank’s projections (100.4%) and consensus estimates (101.7%). Despite this alignment, FY25 core earnings registered a marginal year-on-year decline of 1.0%, primarily influenced by subdued contributions from the manufacturing division and a higher effective tax rate.
Performance Review
The property segment demonstrated robust growth, with earnings before interest and tax (EBIT) increasing 14.2% year-on-year to RM592.3 million, and revenue rising 8.1% year-on-year to RM2.0 billion. This strong performance was underpinned by consistent construction progress on ongoing projects, the launch of higher gross development value (GDV) projects totaling RM2.6 billion (up from RM1.9 billion in FY24), and a solid average take-up rate of 70% for new developments.
Conversely, the manufacturing division faced significant headwinds, with segmental EBIT contracting sharply by 31.3% year-on-year to RM149.8 million, accompanying a 4.3% year-on-year decline in revenue to RM2.5 billion. The division’s struggles were attributed to intense pricing pressure in global markets, stagnant sales volumes, and an 8.0% year-on-year depreciation of the US dollar against the Malaysian Ringgit, which negatively impacted export revenues. Exports accounted for 66% of the total manufacturing revenue in FY25.
Future Outlook and Strategic Initiatives
Looking ahead, the manufacturing segment is expected to continue navigating intense pricing competition, particularly from China. In response, management is prioritizing operational efficiency, focusing on minimizing material wastage, reducing energy and labour costs through enhanced automation, and expanding the adoption of green energy solutions. Notably, 10 of the group’s 16 manufacturing facilities in Malaysia are now equipped with rooftop solar panels, projected to generate annual cost savings of approximately RM10-15 million.
The outlook for the property division remains optimistic, driven by sustained demand for affordable housing, a favorable interest rate environment, steady progress billings, and a substantial landbank of 11,034 acres with an estimated gross development value of RM53.0 billion. The group aims for double-digit revenue growth in FY26, focusing on developing both existing projects and newly acquired land.
Analyst View and Recommendation
Following the FY25 results, TA Securities has revised its FY26F/27F earnings projections upwards by 4.1% and 4.5%, respectively. An initial FY28F earnings forecast of RM655.3 million (+4.4% year-on-year) has also been introduced. The investment bank maintains its BUY recommendation for the stock, with a revised target price of RM4.97 per share, up from RM4.85, based on a Sum-of-Parts (SOP) valuation.
