KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) is cautiously optimistic on UMW Holdings Bhd's outlook with sustained profits by its strong vehicle segment.
This will be supported by a healthy backlog of orders, an improved supply chain and a strong local brand presence.
"Infrastructure projects will sustain demand in the equipment segment, while growing demand for automotive products, first contributions from the new smart lubricant plant, and increased use of its aerospace facility are expected to propel growth in the mechanical and engineering segment alongside the auto division," Maybank IB said in a report today.
End of last month, UMW Lubetech officially opened its new automated lubricants blending plant at Pulau Indah Industrial Park in Klang.
Operational since April 2023, the plant has a capacity of 60 million litres, up from 35 million litres in the old Shah Alam facility.
"Currently running at 50 per cent capacity, UMW expects the plant to generate around RM300 million in revenue, contributing about 30 per cent to its mechanical and engineering segment based on 2022 figures," the firm said.
Maybank IB, meanwhile, is neutral on the RM52.3 million sale of a plot of land within UMW's high-value manufacturing (HVM) park in Serendah Selangor to Perodua.
The firm said there is no significant financial impact to the group, estimating the land disposal price at RM54 per square foot after applying a 10 per cent discount to the most recent selling price of an adjacent plot, which was RM60 psf.
"UMW anticipates a gain of RM6 million following the disposal. According to our channel checks, the market value of the HVM Park land, as listed online, is RM75 psf.
"We do not foresee any significant financial impact on UMW from this disposal, considering the company's existing net cash position," Maybank IB noted.
Maybank IB maintained a "Buy" rating on UMW with target price of RM6.20.