Latest news with #CGSIResearch
The Star
a day ago
- Business
- The Star
Property portfolio, data centres to lift SimeProp
CGSI Research said there would be a number of income streams for SimeProp. PETALING JAYA: Sime Darby Property Bhd 's (SimeProp) accelerating growth on the back of recurring income from the significant expansion of its investment property portfolio has CGS International Research (CGSI Research) reiterating its 'add' call on the stock with an unchanged target price of RM1.90. CGSI Research said there would be a number of income streams for SimeProp, including the recent acquisition of two double-storey logistics warehouses in Bandar Bukit Raja in Selangor that cost RM232mil. The research house said it estimates that the acquisition could contribute between RM7mil to RM8mil in net profit annually, assuming there is a 7% net property income yield. 'Furthermore, we gathered from management during the first quarter (1Q25) results briefing that the group has retained some of their commercial and industrial units to lift rental income,' the research house said. Among them is the KLGCC Mall in Kuala Lumpur that is set to open to the public in the second half of this year (2H25), further boosting the group's portfolio of retail assets. The property developer's commencement of built-to-lease data centres at Elmina Business Park in Selangor is also set to boost recurring income from next year (FY26) onwards. 'Phase one and two of the data centre assets are on track for completion by end-FY26 and 1H27, respectively. We project the investment property portfolio to contribute about RM119mil in net profit by FY27, making up 11% of the group's net profit,' CGSI Research said. However, the research house expects SimeProp to be negatively affected by the 6% sales and service tax (SST) on construction services, as it directly leads to higher construction costs for its commercial and industrial products. On a more promising note, construction as well as rental and leasing services for residential buildings, which account for over 50% of SimeProp's sales are exempted under the expanded SST, thus limiting the overall impact. This could result in SimeProp's profit margins remaining intact in the short term. 'Nevertheless, we do not rule out the risk of softer sales in its commercial and industrial segments as elevated property prices may temper buyer sentiment, potentially leading to deferred purchases or weaker property demand,' CGSI Research said. The research house said following a weaker 1Q25 for SimeProp, it now continues to anticipate stronger quarterly earnings for the group for the rest of FY25 as progress billings pick up pace. 'The valuation has also reverted to a palatable FY26 price-earnings of 15 times, which we deem compelling given the encouraging FY25 to FY27 earnings growth trajectory,' it said. The research house added downside risks include wider losses from the Battersea Power Station development in Britain and slower property launches, while re-rating catalysts were stronger sales growth and further expansion of SimeProp's data centre business. SimeProp's shares closed at RM1.42 in yesterday's trading.
The Star
2 days ago
- Automotive
- The Star
Softer Mazda sales weigh on Bermaz Auto
PETALING JAYA: The softening of Mazda sales amid stiff competition from the influx of Chinese marques is likely to weigh on the earnings of Bermaz Auto Bhd (BAuto) for its financial year 2026 ending April 30 (FY26). In a report, CGSI International Research (CGSI Research) said the aggressive expansion of Chinese automotive brands in Malaysia with their competitive pricing and technologically advanced models could erode Mazda's market share, further pressuring BAuto's margins 'Additionally, if macroeconomic conditions weaken, leading to reduced consumer purchasing power, spending on vehicles could decline. This would negatively affect BAuto's sales volume across all its brands and reduce earnings visibility,' the research house noted. For its fourth quarter ended April 30, 2025, the car distributor's core net profit fell 6% year-on-year (y-o-y) and 20% quarter-on-quarter to RM21.5mil due to weaker contributions from its associates. 'FY25 core net profit slumped 55% y-o-y to RM159mil, which is below 85% of our full-year estimate and 95% of Bloomberg consensus,' CGSI Research said. CGSI Research said it is downgrading BAuto's call from 'add' to 'hold' with a lower price-to-earnings-based target price of 84 sen. It also said it cut its forecast FY26 and FY27 earnings per share by 33% and 20%, respectively, to factor in the lower Mazda sales, lower earnings before interests and taxes due to the competitive environment as well as weaker earnings from the sales of spare parts. 'We revise our valuation methodology from the Gordon Growth Model to a price-to-earnings-based approach to better reflect evolving sector dynamics and investor preferences. 'Given structural shifts in the automotive industry, including margin pressure and changing consumer preference, we believe that a price-earnings framework offers a more relevant benchmark,' the research house said. However, on a brighter note, CGSI Research said it expects the lower forecasts for BAuto's earnings to be partially cushioned by its launch lineup, which includes the Mazda CX-60, CX-80, and three Deepal electric vehicles in the third quarter of this year, alongside its XPeng's G6 and X9 models that might provide a higher margin. 'We think there is potential for XPeng's contributions to grow considering that it only formed 13% of BAuto's Malaysia sales volume in over the last year,' it said. CGSI Research noted that BAuto's net cash position was RM244.7mil as of Apr 30. The research house added that there were both positives and negatives for the car distributor. It said upside included the easing of competition in the automotive sector and improving Mazda sales in Malaysia, while downside risks consisted of greater competition from Chinese brands in Malaysia, and a decline in consumer spending power. BAuto closed at 78 sen in yesterday's trading, giving it a market capitalisation of RM902.96mil.
The Star
12-06-2025
- Business
- The Star
Gamuda on track to achieve order book aim
Gamuda's current order book is estimated at RM37bil. PETALING JAYA: Gamuda Bhd 's failure to land the Suburban Rail Loop (SRL) project in Australia will not diminish its plan to have an order book of RM40bil to RM45bil by the end of its financial year ending July 31, 2025 (FY25), says CGS International (CGSI) Research. The construction and engineering giant has a tender book of RM24bil, including bids for five data centre buildings contracts, according to the research house. Gamuda's current order book is estimated at RM37bil. 'While it did not win the SRL Linewide project, of Gamuda's portion is estimated at RM10bil, we believe the company could win other projects that could replace it. 'At its March analyst briefing, Gamuda highlighted a pipeline of RM35bil jobs where SRL was one of them. 'So far it has won one project from this list, the RM1bil data centre enabling works for Pearl Computing,' the research house stated in a report following a meeting with its management. Some of the projects on bid is the Sabah water treatment plant (RM4bil worth of works), additional works for the Penang light rail transit or LRT project estmated at RM3bil, mass rail transit job in Taiwan (RM3bil), station works in Sydney/Melbourne (RM6bil) and early contractor involvement for renewable energy in Australia worth some RM2bil. Gamuda is due to file its third quarter (3Q25) results on June 26, and CGSI Research expects an improvement in net profit year-on-year (y-o-y) and sequentially, with a meaningful pick-up to come in FY26 when its local construction projects and Vietnam property project gradually move away from the shallow part of the S-curve recognition. CGSI Research said Gamuda is, however, unlikely to meet its RM6bil property pre-sales target for FY25 as approvals for its Hanoi project (Gamuda City) have been slow. 'As Gamuda has pencilled in RM840mil pre-sales for this project for FY25, we believe FY25 group pre-sales will likely come in flat year-on-year (y-o-y) at RM5bil. 'Another concern for investors regarding its exposure to the Vietnam property market, where it has eight projects with a gross development value (GDV) of RM18bil (29% of total GDV as of Jan 25), is US import tariffs, which could disrupt foreign investment and sentiment,' CGSI Research added. The research house viewed Gamuda's exposure to Vietnam as heavy on its residential quick turnaround projects located in prime locations. 'The litmus test is the launch of the third phase of Eaton Park, which we expect to take place in June. 'The maiden launch in May 2024 was fully sold in two hours, leading to a second launch in December 2024, which had since been fully sold as well,' CGSI Research noted. It has retained its 'add' call on Gamuda with a target price of RM6 a share despite trimming its earnings projections on the company. CGSI Research cut its FY25 to FY27 earnings per share forecast for Gamuda by 11%, 7% and 2% for FY25, FY26 and FY27 respectively, driven by expectations of slower progress for some construction projects, such as Silicon Island reclamation works (six months behind schedule) and the Penang LRT. There was also a delay in contract awards of projects including the Sabah Water Treatment plant as well as data centre projects. 'Nevertheless, we think FY27 earnings should still double from FY24, implying three-year compounded annual growth rate of 24%,' it said.
The Star
09-06-2025
- Business
- The Star
QL Resources growth trajectory remains intact
PETALING JAYA: CGS International Research (CGSI Research) expects QL Resources Bhd 's potential expansion into adjacent verticals could possibly bolster further growth for the agro-based group moving forward. Following a recent analysts' call with the QL Resources' management, the research house said 'apart from expanding its product range in the proteins business, which we assume encompasses its ongoing ventures in broiler chickens and aquaculture, the group's management alluded to the need to have better control over the supply chain of its products, potentially expanding its retail reach outside of convenience stores. 'While no further details were provided, given QL Resources' success with the Family Mart franchise, this seems a credible opportunity to plug the earnings gap from the sale of its plantations business,' CGSI Research said in a report yesterday. 'With a net gearing of less than 10%, this provides the group with financial flexibility, in our view,' the research house added. QL Resources' management also provided a neutral outlook on its earnings for its financial year ending March 31, 2026 (FY26) . It expects the combination of egg subsidy rationalisation (five sen each in May and August this year) coupled with the lifting of the price ceiling by Aug 1 to lead to a normalisation in profits on subsidised eggs to between three sen and four sen per egg. 'An expansion of its branded egg segment, currently around 20% of eggs, is hoped to lift profitability over time,' added CGSI Research. Management was also upbeat on the clean-energy business under 53%-owned BM Greentech Bhd , whose pre-tax profit jumped 35% year-on-year (y-o-y) to RM73.5mil in FY25 helped by the acquisition of solar company Plus Xnergy in July 2024. The research house upgraded the stock from a 'reduce' call to 'hold' following its 10.9% share price decline over the past six months, but at a lower target price of RM4.37 per share. 'We believe QL Resources' 30.5 times calendar year 2026 price-earnings ratio better reflects its 14.3% recurring return on equity, but the upside is likely to be capped by slowing earnings growth in FY26,' it noted.
The Star
08-06-2025
- Business
- The Star
Econpile set for new job wins on Penang LRT catalyst
File: Artist impression of Penang LRT Mutiara Line. PETALING JAYA: Econpile Holdings Bhd , which has secured its first contract for the Penang light rail transit (LRT) Mutiara Line, is poised to win more jobs as the RM10bil project gains momentum, analysts say. On June 5, Econpile announced it was awarded a RM42.8mil bored piling sub-package spanning three stations – from East Jelutong to Gelugor – out of the total 21 stations. The works are scheduled to begin on Aug 1, 2025 and end on Oct 31, 2027. CGS International (CGSI) Research said the win validated its view that the Penang LRT is progressing as planned, with full-scale construction expected to begin in the fourth quarter of 2025 (4Q25). 'For the broader construction sector, we think this win validates our thesis that the Penang LRT Mutiara Line is progressing as planned and construction works should be in full swing in 4Q25. 'This is likely to benefit Gamuda Bhd , as we expect it to be contracted for more work for the Penang LRT, amounting to an additional RM3bil on top of its initial contract value of RM5bil,' it said. Other potential beneficiaries include Malayan Cement Bhd , HSS Engineers Bhd , IJM Corp Bhd and Sunway Construction Group Bhd . CGSI Research said Econpile's year-to-date new order wins now total RM333mil, with an order book of RM487mil as at June 2025. The group is aiming for RM400mil to RM450mil in new jobs for its financial year ending Dec 31, 2025 (FY25), in line with last year's performance. 'We expect gross profit margins for the Penang LRT bored piling contract to be about 10%-15%, higher than the recent piling projects for property development it won over the past one year,' it said, adding that Econpile's performance should improve in 4Q25. CGSI Research maintained its 'add' rating and 46 sen target price, citing Econpile's strong presence in infrastructure projects and the largest fleet of bored piles in Malaysia. Meanwhile, CIMB Securities Research said the sub-package forms part of the larger package for which the Gamuda-led SRS Consortium Sdn Bhd – comprising Gamuda (60%), Ideal Property Development Sdn Bhd (20%) and Loh Phoy Yen Holdings Sdn Bhd (20%) – is the principal civil works contractor. Mass Rapid Transit Corp Sdn Bhd is the project developer and asset owner of the Mutiara Line. 'Having secured the first major piling contract under the Penang LRT Mutiara line, the group is well-placed to bid for a larger piling-related job that is coming up,' CIMB Research said. It kept its 'buy' rating and 38 sen target price, pegging the stock at 19 times 2026 core earnings per share of 1.9 sen.
