Osk Holdings Berhad

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by Malacca Securities

A few years ago, $OSK / 5053 (OSK HOLDINGS BERHAD) planned to list its cable business on HKEX but the plan scrapped. I think the acquisition of Universal Cables (which is owned by $SCABLE / 5170 (SARAWAK CABLE BERHAD) ?) will strengthen its cable division and potentially reactivate the listing plan? Haha

$OSK / 5053 (OSK HOLDINGS BERHAD) anyone looking ? recently bought universal cables, cable manufacturing industry still hot ?

$SCGBHD / 0225 (SOUTHERN CABLE GROUP BERHAD) $MTEC / 0295 (MASTER TEC GROUP BERHAD)

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
BUY – TP RM2.47

" Acquisition to double cable capacity”

OSK’s 97.47%-owned subsidiary, Olympic Cable, is acquiring Universal Cable's assets, including two manufacturing facilities producing low, medium, and high-voltage cables for RM85m. We view this acquisition positively given (i) the attractive acquisition price at 41.8% discount to book value, (ii) entry into the growing high voltage cable segment, (iii) enhanced cost efficiencies through economies of scale, and (iv) a faster time to market compared to building a new facility. Additionally, this expansion is timely given the growing demand for cables driven by solar projects, data centres, and grid expansion initiatives. This expansion could potentially double the cable segment current capacity. Our forecasts remain unchanged pending acquisition completion. Maintain BUY with TP of RM2.47 based on 25% discount to our SOP-derived value of RM3.30.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by Malacca
Buy - TP RM1.96

"1H24 Earnings Came In Within Expectations"

Maintain BUY with TP of RM1.96. The TP is based on a sum-of-parts valuation, applying a 1.0x multiple to the book value of the financial services and property development segments. We believe the property segment could benefit from an upcycle in the sector amid rising demand for data centers. The construction, industries, and hospitality segments are valued at a P/E multiple of 9.0x, reflecting their earnings potential in FY24f.

Analyst:
Loui Low
louilow@msec.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
Buy - TP RM2.47

"Results chalking inline"

OSK reported 2Q24 core PATAMI of RM128.7m (+4.8% QoQ; -1.6% YoY), which brought 1H24’s sum to RM251.5m (+2.1% YoY). The results were within our expectation, making up 50% of full-year forecast. Property sales were slower in 1H24, but is expected to pick up in 2H24 following several big launches in Jun/Jul. Capital financing remains strong, driven by growth in civil servant and Australia segments. The group remains on track to record solid growth for FY24 as we anticipate a stronger 2H24. Maintain forecasts and BUY call with a higher TP of RM2.47 (from RM2.37) based on 25% discount to our SOP-derived value of RM3.30 as we impute higher fair value from RHB.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)

HLIB TOP PICKS 2H 2024...

Key themes. We stay upbeat on the three key themes that we highlighted late last year – tourism recovery, energy transition and Johor’s reinvigoration. In addition, we also introduce two new themes, namely (i) disposable income boosters – this follows from measures like the EPF “Account 3” and civil servants pay hike which should drive discretionary spending, and (ii) US-China trade war where geopolitically neutral Malaysia stands to benefit from trade diversion (positive for Furniture, Gloves and Tech) and the China+1 strategy (plays on Construction, EMS and Property).

$YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD) $SUNWAY / 5211 (SUNWAY BERHAD) $NOTION / 0083 (NOTION VTEC BERHAD) $MNHLDG / 0245 (MN HOLDINGS BERHAD) $OSK / 5053 (OSK HOLDINGS BERHAD)

KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) is optimistic about OSK Holdings Bhd's future, citing robust growth in capital financing.

© New Straits Times Press (M) Bhd

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
Buy – TP RM2.37

“An emerging force in private credit market"

We remain positive on the group’s prospects, particularly due to the strong growth in capital financing, which recorded a PBT of RM26.1m in 1Q24, up 13.6% QoQ and 41.8% YoY. Growth prospects for the segment remain strong anchored by Australia and civil servant segment. The property segment expects RM1.75bn in launches for FY24, which is a record high in recent years. The cables segment is poised for growth in 2H24 due to anticipated increased demand from data centres and utility companies. Maintain BUY with a higher TP of RM2.37 (from RM2.21) based on 25% discount to SOP-derived value of RM3.16, reflecting the growing prominence of its business segments.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

PROPERTY
$IOIPG / 5249 (IOI PROPERTIES GROUP BERHAD) $OSK / 5053 (OSK HOLDINGS BERHAD) $SIMEPROP / 5288 (SIME DARBY PROPERTY BERHAD) $SUNWAY / 5211 (SUNWAY BERHAD)
Research by HLIB
Overweight

“Updated MM2H conditions”

On June 15, the Ministry of Tourism, Arts and Culture announced updated guidelines for the Malaysia My Second Home (MM2H) programme, which now includes three categories: Silver, Gold, and Platinum, along with a special category for Special Economic Zones (SEZ) and Special Financial Zones (SFZ). The new MM2H guidelines, which received Cabinet approval, are more relaxed than the 2021 version, with reduced requirements for fixed deposits, offshore income, and liquid assets, but introduces a new requirement for house purchase, which is mandatory for MM2H holders. The revised conditions are expected to renew interest in MM2H, positively impacting the property sector, especially on the high-end segment. However, the program could face competition from similar programs in Thailand and Indonesia. We upgrade the sector rating to OVERWEIGHT from Neutral as we think the sector had entered a new cycle. Our sector top picks are IOIPG, OSK, SimeProp, and Sunway.

Analyst(s):
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
Buy – TP RM2.21

“Solid start for FY24"

OSK reported 1Q24 core PATAMI of RM122.8m (+26.7% QoQ; +6.4% YoY). The results were within our expectation, making up 26.4% of our full-year forecast. The group is on track to record another year of solid growth anchored by property development from better progress billings and project cost savings, capital financing from higher loan portfolio and better economies of scale and industries from growing cables and IBS demand. Its associate RHB is also expected to deliver stable performance given improving capital market from realization of investment activities. Maintain forecast and BUY call with a higher TP of RM2.21 (from RM2.16) based on 30% discount to our SOP-derived value of RM3.06. The stock is poised for further re-rating given its exposure to key growth areas including capital financing, property development, cables and IBS.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by Malacca
Buy – TP RM1.96

“Solid start for FY24"

• Forecast. Remain unchanged at RM474.3m and RM503.1m for FY24-25f.
• Upgrade to BUY with revised TP at RM1.96. We upgrade OSK to BUY (from Hold) and raise the TP higher to RM1.96 (18.1% upside) as we roll over to FY24f as we adopt a sum-of-parts valuation by pegging higher multiple of 1.0x (from 0.8x) to its financial services and property development book value as we believe the latter could be tagging the upcycle in the property sector amid the rising demand for data centers, while the construction, industries & hospitality segments are valued through P/E multiple of 9.0x based on their earnings potential in FY24f.
• Investment risks include weaker-than-expected property sales which may put a brake onto the progress of future launches. Potential default by their borrowers may result in slower contribution from the capital financing business segment.

Analyst:
Loui Low
louilow@msec.com.my

KUALA LUMPUR: OSK Holdings Bhd remains optimistic in delivering satisfactory results for the remainder of 2024, bolstered by healthy unbilled sales in the property development division, steady growth in the capital financing business.

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

PROVISION OF FINANCIAL ASSISTANCE

$MAHSING / 8583 (MAH SING GROUP BERHAD)
$OSK / 5053 (OSK HOLDINGS BERHAD)
$ASTRO / 6399 (ASTRO MALAYSIA HOLDINGS BERHAD)
$MAGNUM / 3859 (MAGNUM BERHAD)
$TSH / 9059 (TSH RESOURCES BERHAD)

KUALA LUMPUR: OSK Holdings Bhd may continue its solid growth trajectory after its financial year results saw record-high revenue and strong earnings growth of 10.2 per cent year-on-year (YoY), according to Hong Leong Investment Bank (HLIB) Research.

© New Straits Times Press (M) Bhd

PETALING JAYA: The civil servants pay hike will be a shot in the arm for property developer OSK Holdings Bhd, as it will mean higher borrowings.

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
Buy (Maintain) – TP RM2.16

“Setting sail for a stronger FY24"

OSK’s FY23 results saw record-high revenue and strong earnings growth of +10.2% YoY, driven by robust performance in capital financing and industries. Growth prospects remain promising for the group in FY24. For property development, the group is scaling up launches in Malaysia and actively looking for new landbanks. Capital financing should see strong growth from its growing civil servant and Australia segments. Cables should see stable demand while IBS is poised for strong growth given the recovering property demand and increasing IBS adoption among contractors. We revise upwards FY24/25 forecasts by +2.1%/3.6% to account for higher contribution from capital financing. Maintain BUY with higher TP of RM2.16 (from RM2.04) based on 30% discount to SOP-derived value of RM3.06 as we rollover our valuation base year.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

KUALA LUMPUR: OSK Holdings Bhd says its 2023 financial performance underscores its enduring optimism towards sustainable growth over the long term.

© New Straits Times Press (M) Bhd

General Meetings: Outcome of Meeting

PROVISION OF FINANCIAL ASSISTANCE

SHARE BUY-BACK STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES.

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

HONG LEONG Top Picks March 2024...

$YTLPOWR / 6742 (YTL POWER INTERNATIONAL BHD) $SMRT / 0117 (SMRT HOLDINGS BERHAD) $ITMAX / 5309 (ITMAX SYSTEM BERHAD) $OSK / 5053 (OSK HOLDINGS BERHAD) $AIRPORT / 5014 (MALAYSIA AIRPORTS HOLDINGS BERHAD)

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by HLIB
Buy (Maintain) – TP of RM2.04

“Record high revenue”

OSK reported 4Q23 RM97m (-21% QoQ; -20.1% YoY), which brought FY23’s sum to RM466.1m (+10.2% YoY). The results were within our expectation, making up 96.9% of our full year forecast. The group’s 4Q23 core earnings dipped both QoQ and YoY as a result of higher tax expenses during the quarter. On a full-year basis, the group achieved record high revenue, while its core earnings also showed strong improvement of +10.2% from the preceding year. Its respective business segments continue to deliver robust performance, especially from capital financing and industries. Maintain forecasts and BUY call with an unchanged TP of RM2.04 based on 30% discount to our SOP-derived value of RM2.91.

Analyst(s):
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my

$OSK / 5053 (OSK HOLDINGS BERHAD)
Research by Malacca Securities
Hold (from Buy) - TP of RM1.49

"Steady Earnings Momentum To End FY23"

Within expectations. In 4QFY23, OSK Holdings Berhad (OSK) recorded core PATMI of RM97.8m (-20.5% QoQ, -19.4% YoY), bringing the sum of the core PATMI for FY23 to RM467.0m (+9.3% YoY). The core PATMI came in within expectations, accounting to 96.5% and 97.1% of ours and consensus estimates. OSK announced 4.0 sen dividend for the quarter, translating to 7.0 sen (FY22: 6.0 sen) for FY23.

Analyst(s):
Loui Low
louilow@msec.com.my