Latest news with #UOBKHResearch
The Star
a day ago
- Business
- The Star
Scientex's property arm offsets packaging woes
UOBKH Research said the group's outlook appears mixed. PETALING JAYA: Scientex Bhd 's financial performance is likely to be propped up by its property development arm, driven by demand for affordable housing. This comes as its plastic packaging division continues to struggle with external challenges, particularly stiff competition from Chinese manufacturers and foreign-exchange (forex) losses. The company's third-quarter results for the period ended April 30, 2025 (3Q5), released on Wednesday, showed continued weakness in its packaging arm. UOB Kay Hian (UOBKH) Research noted that fierce competition from China and unfavourable forex movements resulted in margin compression. The research house, which maintained its 'buy' call on the stock with a higher target price of RM4.10 (up from RM4.05), said the group's outlook appears mixed. While property earnings remain robust, amid recent landbank acquisitions signalling upcoming launches, the plastic packaging business faces structural headwinds from Chinese supply. 'As a result, we believe the property segment will remain the main growth driver for Scientex in the near term, pending potential consolidation in the packaging industry,' it said. The research house added that forecasts for the financial year ending July 31, 2025 (FY25), to FY27 have been revised downward to account for lower margins in the packaging arm. RHB Research shared that Scientex's management believes the plastic packaging market will remain challenging in the near term, especially in the industrial sub-segment. However, a rebound is anticipated in 2026, supported by returning demand for the consumer sub-segment, which makes up 45% to 50% of total packaging revenue. 'On the property business, we are optimistic that Scientex is on track to achieve its property launch target of more than RM2bil for FY25. 'Hence, we continue to expect the property segment to be the main earnings contributor in the coming quarters,' the research house said. RHB Research remains 'neutral' on Scientex, lowering its target price to RM3.50 from RM3.70 and cutting earnings assumptions for FY25 to FY27. Meanwhile, TA Research noted that Scientex's management expects sustainable packaging demand to remain strong despite the subdued outlook. 'On a positive note, we expect average selling prices and volumes for consumer packaging to remain stable, supported by a wider range of product offerings and designs for customers,' it said. The research house maintained its 'buy' call but trimmed its target price to RM4.85 from RM5.54 and cut earnings forecasts for FY25 to FY27, It said Scientex plans to launch 8,000 affordable housing units in FY25, up from 6,336 in FY24. Kenanga Research kept its 'market outperform' call and target price at RM3.60, noting downside risks have largely been priced in. However, it flagged the need to monitor resin prices, a key plastic packaging raw material, due to recent surge in crude oil prices.
The Star
11-06-2025
- Business
- The Star
QL Resources to remain resilient amid trade tensions
Following the removal of the egg subsidy, UOBKH Research said profitability is expected to fall to three sen to five sen per egg. PETALING JAYA: Although QL Resources Bhd remains resilient amid trade tensions and the minimum wage hike policy, its core segments are facing a mixed outlook, according to UOB Kay Hian (UOBKH) Research. Based on the company's estimates, only 0.5% of total group sales are US export sales, which primarily consisted of surimi-based products, said the research house. 'Evidently, the tariff war would have a minimal direct impact on QL Resources. 'However, management does not rule out that supply disruptions and curtailed spending may indirectly impact its operations,' said UOBKH Research. Meanwhile, 27% of the company's workforce of 12,000 employees will benefit from the minimum wage revision, which is expected to cost the group an additional RM10mil or a digestible 1.4% of its financial year 2026 (FY26) profit before tax earnings. Management expected to largely absorb it or see a partial cost pass through, the research house noted. QL Resources is involved in integrated livestock farming (ILF), marine products manufacturing and palm oil activities in Malaysia, Indonesia and Vietnam. For the ILF segment, the government has rationalised its subsidies on eggs, reduced it to from 10 sen per egg to five sen effective since May 1 and subsequently removing it on Aug 1. The company earned an estimated 10 sen per egg under the full subsidy scheme. Following the removal of the egg subsidy, UOBKH Research said profitability is expected to fall to three sen to five sen per egg. To protect its margins, the company is looking to lift its product mix toward its margin accretive branded eggs, which accounts for 20% of its total egg sales. The fishing and fishmeal sub-segments are likely to see extended headwinds, the research house noted. Fishmeal selling price has stabilised, but demand remains weak due to a slowdown in world aquaculture activity. This is further compounded by a higher Peru fishing quota which may exert pressure on prices going forward. In contrast, surimi and surimi-based products could see an improved performance in FY26. In the palm oil segment, growth would be driven by its solar company Plus Xnergy Holdings Sdn Bhd's contributions that are tied to its renewable energy and environmental, social and governance solution business. 'Its palm oil contributions are likely to moderate alongside lower crude palm oil prices that have trended downward to RM3,800 from more than RM4,200 in the fourth quarter of 2025 (4Q25) amid similar fresh fruit bunch production and oil extraction rate output,' UOBKH Research said. The research house is maintaining its 'hold' stance on QL Resources' with an unchanged target price of RM4.80, adding that key risks include unfavourable weather conditions affecting fishing yields, outbreak of poultry diseases and a sharp collapse in crude palm oil prices.
The Star
11-06-2025
- Business
- The Star
Lack of capacity choking Westports push for container volume growth
UOBKH Research said signs of transshipment recovery could be observed in Westports' container volume data for the first four months of 2025. PETALING JAYA: Westports Holdings Bhd 's lack of spare capacity is choking its ability to push for a stronger container volume growth, says UOB Kay Hian (UOBKH) Research. Average vessel berth waiting times at Port Klang had been at two to three days, while yard congestion hovered at a critical 90%, as pointed out by the research house . In a note, it said Westports' container volume growth pales in comparison to that of Straits of Malacca peers such as Port of Singapore Authority and Port of Tanjung Pelepas. 'Although group chief executive officer Datuk Ruben Emir Gnanalingam's decision to retain single-digit growth guidance is admirable in hindsight, he reiterates the limitation on volume growth arising from Westports' lack of spare capacity.' The Gnanalingam family owns 45.5% of Westports, which runs an integrated port facility at Port Klang. Meanwhile, UOBKH Research said signs of transshipment recovery could be observed in Westports' container volume data for the first four months of 2025. It also said that by anticipating a resurgence in trade during the 90-day tariff cooldown, Westports can meet its unchanged volume growth guidance. 'While gateway volume continued to look weak, transshipment boxes appeared to be restaging growth in April 2025, and this benefited both NCB Holdings Bhd and Westports (total growth recovered to 3%). 'Port Klang's 4% year-to-date growth also appeared on track towards the 2025 target of 15 million twenty-foot equivalent units (2.3% growth). 'In our opinion, while May data may still look weak, it may be a prelude to Trump Always Chickens Out impact, namely a rush of China-cargoes to the United States during a 90-day tariff cooldown.' On port tariff hike, UOBKH Research said the expectations had been priced-in. It is noteworthy that a 30% tariff hike for container handling and storage has been proposed. The tariff hike is to be spread into three phases, with a more transparent and structured tariff review mechanism.
The Star
04-06-2025
- Business
- The Star
Delay in major Uzma project remains a concern
The order book could grow by RM1bil following Uzma's latest win. PETALING JAYA: The delay in Uzma Bhd 's major project has caused analysts to be concerned about the impact on its earnings despite the substantial new contract wins of the oil and gas (O&G) company. UOB Kay Kian (UOBKH) Research stated the sailaway of the Sara water injection facility (WIF) to offshore Sabah site would likely be delayed to October this year or February next year instead of the April 2025 target due to various client-requested design changes. 'Uzma can deliver the WIF in October, but it will encounter the monsoon when it arrives at Hibiscus Petroleum's offshore site in Sabah. Under this scenario, Uzma may have to bear the high transportation and installation costs. 'Therefore, from a project cost perspective, it is better to sail away in February 2026 (but also means the startup will miss financial year 2026 (FY26) completely),' the research house stated. On the positive side, Uzma has grown its order book to RM4.1bil as of April but unfortunately many of the projects are small, UOBKH Research added. The order book could grow by RM1bil following Uzma's latest win. It has secured a two-year long-term charter contract from PETRONAS Carigali for the seismic vessel WOA, from March 14, 2025 to March 13, 2027. The contract involved comprehensive seismic data acquisition across Peninsular Malaysia and Sabah, in addition to providing ancillary services such as catering, according to Phillip Capital Research. It expected the charter to contribute about RM10mil in annual profit to Uzma. Uzma's order book growth was primarily O&G-driven (with O&G comprising 74% mix), and the bulk of the growth came from the production service segment, which surged from RM1.1bil to RM2bil quarter-on-quarter. Uzma will miss its five-year internal target of a recurring income mix of 60% due partly to the delay risk of Sara-WIF. 'We believe this downside risk is fully priced in, but recommend a wait-and-see approach for earnings delivery and the (environmental, social and governance) development. 'Retain 'buy' and target price (TP) of 76 sen a share,' UOBKH Research noted in its latest report on the company following a briefing with Uzma's management. The valuation is at an unchanged price earnings (PE) multiple of eight times. Phillip Capital Research also retained its 'buy' rating on Uzma with a TP of 76 sen a share, based on eight-times PE on FY26 earnings per share. The stock is currently trading at an attractive four-times forward FY26 PE, with a forward dividend yield of 5% providing additional support to the share price.
The Star
03-06-2025
- Business
- The Star
Rising number of tourists to lift Genting's earnings
PETALING JAYA: As Genting Bhd began its new financial year with a disappointment amid lacklustre performances from all its gaming units, analysts have downgraded their earnings projections for the stock. Nevertheless, the market remains bullish on the conglomerate, with the majority of analysts keeping a 'buy' call. In fact, UOB Kay Hian Research (UOBKH Research) upgraded its rating to 'buy' after Genting's results announcement on May 29. Genting, which dropped off the FBM KLCI list last December, saw lower than-expected contributions from gaming operations in Singapore, Malaysia, Britain and the United States in the first quarter of the year (1Q25). Despite higher contributions from the plantations and power businesses, Genting's adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) slumped 22.7% year-on-year (y-o-y) to RM2bil with revenue dropping 12.4% y-o-y to RM6.5bil. Following this, TA Research cut its earnings for this year (FY25) by 47% and 68% for FY26. This was done after revising lower the earnings forecasts for Genting Singapore Ltd and Resorts World Las Vegas, as well as incorporating Genting Malaysia Bhd 's (GenM) revised earnings projections. UOBKH Research, on the other hand, believes GenM's profitability remains intact. However, it said it thinks that unfavourable capital management, a potential capital expenditure upcycle that may pressure gearing, and finance costs may result in longer period of valuations de-rating. 'Key re-rating catalysts include winning another New York casino tender. With the share price correcting 19% year-to-date, valuations appear depressed below the mean with a palatable 5.5% to 7% dividend yield,' the research house said. Hong Leong Investment Bank Research (HLIB Research) said it has cut its earnings forecast for Genting by 26% for FY25 and 27.6% for FY26. HLIB Research, which is one of the research houses that has cut its target price for the Genting, continues to like Genting for its well-established operational presence across diverse regions, mitigating regulatory and geographical risks. Going forward, it expects Genting to benefit from the stronger tourist arrivals in both Singapore and Malaysia. 'Besides, Genting has the potential value-add with its stake in TauRx Pharmaceutical Ltd in Scotland if its drug, hydromethylthionine mesylate (HMTM) receives US Food and Drug Administration approval.' Genting has a 20.3% stake in the pharmaceutical company. On GenM, Kenanga Research expects the company to see 'better days beyond FY25'. It said Resorts World Genting is seeing more local visitors, along with Singaporeans and Indonesians. Mainland Chinese and Indian tourists are also expected to increase as Malaysia builds up momentum towards welcoming 36 million visitors in Visit Malaysia 2026. 'The Ebitda margin is expected to improve marginally and gradually from current 26% towards 27% to 25% over FY25 to FY26 on improving visitor numbers. 'GenM's US operations should see softer but still firm earnings from Resorts World New York City on rising risk of slower local economic growth coupled with full consolidation of still loss-making Empire Resorts Inc. 'The group's British and Egypt operations are also expected to report firm earnings with rising risk of some softening,' added Kenanga Research.
