Ibraco Berhad

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA

🚀 BUDGET 2025 MALAYSIA THEME STOCKS 🚀



💥 Pre-Rally Alert 💥: Stocks to watch in anticipation of Budget 2025 on 18 Oct 2024:

1️⃣ Infrastructure 🏗
Transportation Projects → MRT 3, Penang LRT 🚆
Water Infrastructure → Pipe replacements, filtration, flood control 💧
Key Stocks: SUNCON, GAMUDA, IJM, RESINTC, ENGTEX, MCEMENT

2️⃣ Sarawak 🌴
More Allocations → Infrastructure and energy projects in Sarawak 🌱
Renewable Energy → Focus on East Malaysia's green projects ♻️
Key Stocks: IBRACO, PANSAR, CMSB, AFFIN

3️⃣ Johor 🏙
Tax Incentives → Johor-Singapore Special Economic Zone and Special Financial Zone 🏭
First-Time Homebuyer Discounts 🏡
Key Stocks: UEMS, IOIPG, KSL, CRESNDO

4️⃣ Cybersecurity 🔒
Cybersecurity initiatives → More funding and subsidies for cybersecurity measures.🖥
Key Stocks: LGMS, CLOUDPT, INFOTEC

5️⃣ Food 🍗
Subsidy Removals → potential removal of egg and sugar price subsidies and ceiling prices 🍳
Tax Hike → Sugar-sweetened beverage taxes 🥤
Key Stocks: TEOSENG, PWF, MSM

6️⃣ Palm Oil 🌴
Windfall Tax Cut → Likely increase in threshold 📉
Key Stocks: SOP, TAANN, JTIASA

7️⃣ Electronic Invoices 🧾
Phased Rollout → eInvoice for businesses 💼
Key Stocks: ADB, PANDA, IFCAMSC

8️⃣ Renewable Energy 🌞
Growth in Renewables → LSS5, Floating solar, EV charging 🌱
Key Stocks: SLVEST, SAMAIDEN, SCGBHD

9️⃣ Tech & Manufacturing 💻
Incentives for High-End Manufacturing → Semiconductor industry growth 🔧
Key Stocks: KGB, AME, INARI, MPI

$IBRACO / 5084 (IBRACO BERHAD) $SCGBHD / 0225 (SOUTHERN CABLE GROUP BERHAD) $JTIASA / 4383 (JAYA TIASA HOLDINGS BHD) $TEOSENG / 7252 (TEO SENG CAPITAL BERHAD) $UEMS / 5148 (UEM SUNRISE BERHAD)

$IBRACO / 5084 (IBRACO BERHAD) AUG 2024...

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Buy - TP RM1.36

"Aiming High for 2H Performance"

Factoring the revised earnings, we arrive at a new target price of RM1.36 (previously RM1.33), based on SOP valuation. Maintain Buy.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Buy – TP RM1.33

"Dragged by Slow Property Development Segment”

No change to our SOP-derived TP of RM1.33/share. We remain optimistic about Ibraco’s strong foothold in Sarawak, which continues to drive solid property sales and secure construction projects with above-average profit margins. Maintain Buy.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

PROPERTY
$IOIPG / 5249 (IOI PROPERTIES GROUP BERHAD) $SIMEPROP / 5288 (SIME DARBY PROPERTY BERHAD) $IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Overweight

“Sky High Prospects ”

This report dives into the exciting rise of developers’ share prices, showing why this surge is more than just a fleeting trend but rather a golden opportunity worth accumulating. The Malaysian property sector is poised for a period of significant growth, driven by the end of the BNM's interest rate hike cycle, major infrastructure projects, the establishment of special financial hubs and economic zones, and homeowner-friendly policies. In addition, the burgeoning Data Centre thematic play, which was absent during the 2013 upcycle, is now a significant growth driver. The property market is not only riding a wave of positive news but is also backed by solid fundamentals and growth prospects. Despite the sector’s current valuation being above the long-term average, the strong economic fundamentals and new growth drivers provide a compelling case for continued upward momentum. Maintain Overweight. Top Buy Picks are IOIPG, SIMEPROP and IBRACO.

Analyst(s):
Thiam Chiann Wen
cwthiam@ta.com.my

TA SECURITIES TOP PICKS 2ND HALF 2024...

Investment Strategy – Buy This Market. Savings from government subsidy rationalisation, multi-billion public spending on infrastructures, foreign direct investments and domestic direct investments in renewable energy and growth sectors identified under the long-term plans are boosters for domestic sectors. Thus, our top picks are closely associated with the Banking, Construction, Consumer, Healthcare, Power, Property and Telco sectors. The strong growth in the E&E exports driven by the “China Plus One” strategy and demand for advanced technologies, electric vehicles, data centres, etc. are expected to sustain interest in the Technology sector while benefitting Power and Telco players as well.

Buy Picks. In line with the above views, our top big-cap picks are PBBANK, YTLPOWR, TM, GAMUDA, INARI and IOIPG. Top small and mid-cap stocks are INTA, PGF, IBRACO, ABLEGLOB, SCOMNET, FFB, SUNCON, ABMB and SIMEPROP.

$INTA / 0192 (INTA BINA GROUP BERHAD) $IOIPG / 5249 (IOI PROPERTIES GROUP BERHAD) $POLY / 8117 (POLY GLASS FIBRE (M) BERHAD) $IBRACO / 5084 (IBRACO BERHAD) $YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD)

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSPursuant to Paragraph 10.08(1) of the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities"), the Board of Directors of IBRACO ("Board") wishes to announce that IBRACO had, on 10 June 2024, entered into a sale and purchase agreement pertaining to a related party transaction with Heng Say Properties Sdn. Bhd. ("Purchaser" or "HSPSB"), a person connected to Mr. Ng Cheng Chuan ("NCC"). NCC is the Chairman and a major shareholder of IBRACO.

Change in Nomination and Remuneration Committee - PUAN JUNIJAH BINTI ISMAIL

Change in Audit Committee - PUAN JUNIJAH BINTI ISMAIL

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Buy – TP RM1.33

“Harnessing the Momentum of Sarawak’s Infrastructure Boom"

No change to our SOP-derived TP of RM1.33/share. We maintain our Buy recommendation on the stock.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

Sarawak's Economic Takeoff: Companies That Could Benefit

In 2024, Malaysia's GDP is expected to grow by 4% to 5%. However, Sarawak's growth rate is projected to be higher, reaching 5% to 6%. With the Sarawak government allocating RM9 billion for development in its 2024 state budget, the economic outlook for Sarawak looks very promising. This budget increase signifies the Sarawak government's strong commitment to accelerating regional economic growth and development.

This substantial budget is likely to be used for various development projects, including infrastructure upgrades, support for local industries, and social welfare programs. These initiatives could attract more investment, create jobs, and improve the overall quality of life for the people of Sarawak.

For the stock market, this undoubtedly presents new opportunities. Here are a few areas that might benefit:

📍 Infrastructure Construction: With infrastructure upgrades and expansions, related construction and engineering companies could benefit. This could drive up their stock prices.

📍 Local Industries: The government might provide more support and incentives to promote the development of local industries, which could enhance the profitability of related companies and, in turn, boost their stock prices.

📍 Social Welfare: As social welfare programs are implemented, consumer purchasing power could increase, potentially driving up the stock prices of retail and consumer goods companies.

Here are some stocks related to Sarawak that could potentially benefit from Sarawak's economic takeoff:

📌 $CMSB / 2852 (CAHYA MATA SARAWAK BERHAD)

CMSB is a Sarawak-based conglomerate engaged in cement production, construction materials & trading, construction, road maintenance, property development, ICT, and financial services. This company has historical ties to the late Tun Taib, the former premier and Yang di-Pertuan Negeri Sarawak.

📌 $KKB / 9466 (KKB ENGINEERING BERHAD)

KKB specializes in steel fabrication for buildings and other products used in the construction sector. The company has also diversified into manufacturing steel pipes, pipe specials, and LPG cylinders. This expansion aligns well with the anticipated infrastructure boom in Sarawak, making KKB a likely beneficiary.

📌 $IBRACO / 5084 (IBRACO BERHAD)

IBRACO is involved in property development, construction, and quarry businesses in Sarawak. Like CMSB and KKB, IBRACO stands to gain from the increased infrastructure activities in the region.

📌 $ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)

ADVCON operates as a construction firm specializing in civil engineering and infrastructure projects, focusing on earthworks and related services. In 2023, Advancecon (Sarawak) Sdn Bhd secured a RM45.4 million earthworks contract from Petros Power Sendirian Berhad for the Miri Combined Cycle Gas Turbine (MCCGT) Power Plant Project. This positions ADVCON well for future projects in Sarawak.

📌 $ZECON / 7028 (ZECON BERHAD)

ZECON is involved in construction, water infrastructure, property development, and healthcare & hospital concessions. The company covers a wide range of sectors, including buildings, roads, bridges, and water infrastructure. On 15 March 2024, Zecon and Sarawak Digital Economy Corporation Berhad (SDEC) signed a Memorandum of Understanding to collaborate on the Kota Petra Masterplan, which includes developing an integrated urban area with smart city technologies.

📌 NAIM

Naim is a leading township developer in Sarawak with flagship developments in Miri, Kuching, and Bintulu. As a Class A Bumiputera Contractor with ISO 9001 certification, Naim has also expanded beyond Sarawak into Sabah, Peninsular Malaysia, and Fiji, working on various large-scale projects, including the MRT project in Klang Valley and road rehabilitation projects in Fiji.

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Buy – TP RM1.33

“Looking Forward to Stronger Quarters Ahead"

We remain positive on Ibraco's strong position in Sarawak, which has led to robust property sales and the securing of construction projects with above-average profit margins. Maintain Buy.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

General Meetings: Outcome of Meeting

KUCHING: Sarawak-based property developer Ibraco Bhd has embarked on its second major high-rise serviced apartment project in Peninsular Malaysia.

IBRACO - Notice of Book Closure

Final Dividend

OTHERSProposed declaration of a Final Single-Tier Dividend of 2.00 sen per ordinary share for the financial year ended 31 December 2023.

General Meetings: Notice of Meeting

Annual Report & CG Report - 2023

Change in Boardroom - MR GUIDO PAUL PHILIP JOSEPH RAVELLI

Change in Audit Committee - MR GUIDO PAUL PHILIP JOSEPH RAVELLI

Change in Nomination and Remuneration Committee - MR GUIDO PAUL PHILIP JOSEPH RAVELLI

Annual Audited Accounts - 31 Dec 2023

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA
Buy – TP of MYR1.18

“Riding on the Wave of Sarawak’s Infrastructure Boom”

Following a productive discussion with Ibraco management, we are optimistic about the group's future earnings prospects. Key takeaways from the meeting include: 1) FY23 sales figure would have been higher, 2) FY24 sales target of RM400mn is conservative, 3) remain active in bidding despite having a record construction orderbook and 4) building material division to complement its core property and construction division. With solid unbilled sales of RM244.8mn, a promising future GDV of RM5.6bn and a record outstanding construction orderbook of RM1.2bn, we forecast Ibraco's net earnings to expand at a 5-year CAGR of 24.2% to RM69.5mn in FY26f. We maintain our Buy recommendation on Ibraco with a higher TP of RM1.18/share, based on SOP valuation.

Analyst(s):
Thiam Chiann Wen
cwthiam@ta.com.my

$IBRACO / 5084 (IBRACO BERHAD)
Research by TA Securities
Buy - Target Price RM1.16

“Another Busy Year Ahead”

MIbraco reported a normalised net profit of RM42.1mn in FY23, after adjusting for the impairment on receivables amounting to RM1.7mn and a fair value gain from investment properties of RM5.6mn. FY23 results came in below expectations, accounting for 87% of our full-year earnings projections, owing primarily to weaker-than-expected performance at the construction division.

Analyst:
Thiam Chiann Wen
cwthiam@ta.com.my

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

$KIMLUN / 5171 (KIMLUN CORPORATION BERHAD) and $KKB / 9466 (KKB ENGINEERING BERHAD) as potential beneficiaries of the developments of Kuching's Urban Transportation System Plan


*Excerpts taken from RHB Research Report*

As many know, recently the Sarawak Government had announced a second award of the next package of the Autonomous Rapid Transit (ART) system. This is significant as Sarawak gears up for major CAPEX to develop the state, which is fully funded by the state itself and not from federal. Trivia: 2024 is Sarawak's record high budget for development expenditure, for highways, buildings, infrastructure and so on, coming in at RM 9bil.

Briefly, the ART is divided into 3 lines, Blue, Red, and Green lines. The blue line package was awarded to a consortium containing $IBRACO / 5084 (IBRACO BERHAD) (remember the limit ups?). The red line was secured by unlisted companies. The Green line has yet to be awarded at this juncture.

Companies with track record in Sarawak infra had been shared before by @ricardomilos1021 here: https://cutt.ly/awJrqI3X so I would recommend giving it a read.

As discussed in @Jinnsern 's thread about KKB here: https://cutt.ly/lwJrqOFv , two potential beneficiaries are KKB and Kimlun. Not simply as a speculation on whether or not they will win the final package, but rather their track record of suppling necessary materials for works.

As you may know, Kimlun is one of the precast concrete suppliers, selling girders and they have supplied it to many highway projects before (including to Singapore). KKB, being a pipe supplier, will no doubt be able to supply some to the infra works as well. I think @RHBTradeSmartMY 's report on the developments is quite spot on highlighting these 2 companies as investible ideas.

I'm keenly following news on Sarawak as I think there is a good tailwind there.

OTHERSIBRACO BERHAD

INCORPORATION OF A JOINT VENTURE COMPANY