Mkh Berhad

KENANGA TOP PICKS 2025...

Raising the bar

- 1Q25 will contain the element of wait-and-see, as a cautious ASEAN stock market recently reflects the uncertainty on how tariffs threats will play out, compounded with higher US rate expectation. These 2 conditons resemble 2018 but this time Malaysia is better placed on fundamentals amid structural themes, and has been relatively insulated.

- Amid uncertainty, investors may gravitate towards earnings and outlook visibility. Consumer sector will enjoy the minimum wage tailwind that dovetails with tourism growth. Structurally, AI/ data centre plays offer demand visibility from global big-tech capex ramp up. We also screen for names those offering good dividend yields at a reasonable valuation (exhibit 7), as we believe also that investors will likely hunt for value after recent KLCI pullback. Banks would fall under such a description.

- Borrowing from the barbell investment strategy, we pair the above more steady plays with some higher risk-reward names. This may be sectors that could be more volatile in nature such as petrochemicals and metals, but could profit from demand growth such as China stimulus. Likewise, planters and gloves though at the moment they should display strong quarterly earnings cadence.

$NATGATE / 0270 (NATIONGATE HOLDINGS BERHAD)
$MKH / 6114 (MKH BERHAD)
$WASEONG / 5142 (WAH SEONG CORPORATION BERHAD)

$MKH / 6114 (MKH BERHAD)
Research by CGSI

$MKH / 6114 (MKH BERHAD)
Research Report by KENANGA

$MKH / 6114 (MKH BERHAD)
Still as boring as ever. Mr. Market wouldn't touch this stock, unless new developments arise. Still family operated though.

KENANGA TOP PICKS Q4 2024

Play broadening out. Post US Federal Reserve’s pivot, Malaysia should remain in a sweet spot as a net beneficiary of equity inflows, thanks to stable interest rate, and relatively appealing valuation versus historical norms. Unsurprisingly, recent market interest has largely been in blue chips, but we see broadening out in foreign interests in key sectors beyond the comfort zone of large caps, such as in banks which is somewhat underway.

Overhang removal play. In 4QCY24, we anticipate news on telco overhang removal for mobile network operators, dovetailing into tech plays to be rekindled as data centre ramp up to fit-out stage. Historically October is a quiet month, but we anticipate 4QCY24 to get more vibrant as domestic news flow ramp up, including Budget 2025, for positioning into more volatile names. Externally, sentiment improvement in US stocks is typical after US elections (5th November).

Negatives priced-in play. Sectors such as oil and gas have been unjustifiably de-rated beyond their fundamentals. Also, as value have emerged, we recently upgraded the glove sector on demand-supply rebalancing (tariffs notwithstanding), and automotive sector.

$DAYANG / 5141 (DAYANG ENTERPRISE HOLDINGS BERHAD) $DIALOG / 7277 (DIALOG GROUP BERHAD) $TGUAN / 7034 (THONG GUAN INDUSTRIES BERHAD) $WASEONG / 5142 (WAH SEONG CORPORATION BERHAD) $MKH / 6114 (MKH BERHAD)

$MKH / 6114 (MKH BERHAD)
Research by Kenanga
Outperform - TP RM1.81

"A Slower Patch"

MKH’s 9MFY24 results missed our forecast and market expectations. Its 9MFY24 core net profit rose 7% YoY driven by its bread-and-butter segments. We like MKH for its affordable and transit-oriented development (TOD) property offerings and expanding plantation business in Kalimantan. We cut our FY24-25F earnings forecasts by 16% and 12%, respectively, and reduce our TP to RM 1.81 (from RM1.83) and maintain OUTPERFORM call.

Analyst:
Clement Chua
clement.chua@kenanga.com.my

$MKH / 6114 (MKH BERHAD)
Research by CGS
Hold - TP RM1.44

"Lifted by property and plantation segments"

■ 9MFY6/24 core net profit of RM59.6m came in within expectations at 72% of our FY24F estimate but missed Bloomberg consensus expectations.
■ Management revised its planned launches for FY24 upward to an estimated GDV of RM1.1bn (from RM520m, previously).
■ Reiterate Hold with an unchanged SOP-based TP of RM1.44. This note marks the transfer of coverage to Lucas Tan.

Analyst:
Lucas TAN
lucas.tan@cgsi.com
CHONG Tjen-San, CFA
tjen-san.chong@cgsi.com

PROVISION OF FINANCIAL ASSISTANCE

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - TAN SRI DATUK CHEN LOK LOI

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - TAN SRI DATUK CHEN LOK LOI

KENANGA 2H 2024 TOP PICKS SMALL CAP

$OPPSTAR / 0275 (OPPSTAR BERHAD) $KAREX / 5247 (KAREX BERHAD) $TGUAN / 7034 (THONG GUAN INDUSTRIES BERHAD) $MKH / 6114 (MKH BERHAD) $ENGTEX / 5056 (ENGTEX GROUP BERHAD)

$MKH / 6114 (MKH BERHAD)
Research by CGS
Hold – TP RM1.44

“Lowers GDV of FY24F planned launches"

■ MKH achieved a core net profit of RM24.5m in 1HFY24, a 21% yoy increase, driven higher contributions from both the property and plantation segments.
■ Management revised downwards its planned launches for FY24F to RM520m GDV, from RM640m previously.
■ Maintain Hold with an unchanged SOP-based TP of RM1.44.

Analyst:
CHONG Tjen-San, CFA
tjen-san.chong@cgsi.com

$MKH / 6114 (MKH BERHAD)
Research by Kenanga
Outperform – TP RM2.11

“A Soft Patch, Fundamentals Intact"

MKH’s 1HFY24 results missed our forecast but met market expectations. Its 1HFY24 core net profit rose 30% YoY driven by strong property and plantation profits. We like MKH for its affordable and transit-oriented development (TOD) property offerings and expanding plantation business in Kalimantan. We cut our FY24-25F earnings forecasts by 9% and 8%, respectively, but maintain our TP of RM2.11 and OUTPERFORM call.

Analyst:
Clement Chua
clement.chua@kenanga.com.my

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

PROPERTY
$MKH / 6114 (MKH BERHAD)
Research by Kenanga
Neutral

“The Spotlight Remains at Affordable Housing”

We maintain our NEUTRAL stance. We remain cautious on the property sector due to oversupply, high household debt, elevated interest rates and weakened consumer sentiment, which could further be dampened by escalating living costs. There is optimism in the Johor property market fuelled by the Special Economic Zone initiative and seamless public transport connectivity upon the completion of the Johor Bahru-Singapore Rapid Transit System in 2026. Although developers continue to tread cautiously, we see a bright spot in the affordable housing segment and developers that have strong foothold in matured townships. Our sector top pick is MKH (OP; TP: RM2.11) given their focus on affordable units priced below RM500k.

Analyst(s):
Clement Chua
clement.chua@kenanga.com.my

$MKH / 6114 (MKH BERHAD)
Research by RHB
TP of MYR0.66

“A New Player To The Game”

MKH Oil Palm intends to raise MYR136.4m from its IPO, mainly to fund its expansion of landbank for oil palm plantation, upgrading works and the setup of PK crushing facility. MKHOP’s young topographical profile should boost its FFB output, propelling its 3-year earning CAGR of 25% from FY24F-26F. As such, we believe its valuation is attractive, with an implied P/E based on the IPO price of 12x 2025F, ie a 3x discount to its 4-year historical peer market cap weighted average of 15x.

Analyst(s):
Hoe Lee Leng
hoe.lee.leng@rhbgroup.com

PROVISION OF FINANCIAL ASSISTANCE

OTHERSMKH BERHAD ("MKH" OR "COMPANY")

LISTING OF MKH OIL PALM (EAST KALIMANTAN) BERHAD ("MKHOP"), A SUBSIDIARY OF MKH, ON THE MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD ("BURSA SECURITIES") ("LISTING")

General Meetings: Outcome of Meeting

Notice of SBB by a Company Pursuant to Section 127 (16) of CA 2016

$MKH / 6114 (MKH BERHAD)
Research by Kenanga
Outperform - TP of RM2.11

"Growing Property, Plantation Businesses"

MKH’s 1QFY24 results met expectations. Its 1QFY24 core net profit more than doubled driven by strong performance across the board. We like MKH for its affordable and transit-oriented development (TOD) property offerings and expanding plantation business in Kalimantan. We maintain our forecasts and OUTPERFORM call.

Analyst(s):
Clement Chua
clement.chua@kenanga.com.my

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

Immediate Announcement on Shares Buy Back

OTHERSMKH BERHAD ("MKH" OR "COMPANY")

PROPOSED LISTING OF MKH OIL PALM (EAST KALIMANTAN) BERHAD ("MKHOP"), A SUBSIDIARY OF MKH, ON THE MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD ("BURSA SECURITIES") ("PROPOSED LISTING")

Annual Report & CG Report - 2023

STATEMENT TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES

MKH - Notice of Book Closure

Dividend in specie

General Meetings: Notice of Meeting