$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)
Research by HLIB
Buy – TP RM0.55

“Longer term prospects remain intact"

While near term earnings will likely weaken (both QoQ and YoY, on the back of weaker steel prices), we remain optimistic on HTVB’s longer term earnings prospects, supported by (i) pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia, (ii) ESSB’s continued efforts in improving its cost competitiveness and utilisation rate at new blast furnace, and (iii) weak demand sentiment for steel products in China may have bottomed. We raise our FY24-26 core net profit forecasts by 18.0%/4.2%/2.2%, mainly to account for (i) higher production volume assumption for ESSB in FY24, and (ii) slightly lower fixed cost assumptions at ESSB in FY25-26 (following recent completion of additional ancillary facilities). Post earnings revision, we maintain our BUY rating on HTVB with a slightly higher TP of RM0.55 based on 7x revised FY25 core EPS of 7.8 sen.

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my