HLIB Research maintains 'buy' stance for OSK Holdings

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

In the first quarter of 2024, OSK recorded a pre-tax profit of RM26.1 million, marking a 13.6 per cent increase from the previous quarter and a 41.8 per cent rise from the same period last year.

The firm said OSK Holdings is expanding its presence in Australia, extending beyond Victoria into New South Wales and other states, and is currently funding its Australian loan disbursements through bank facilities from Malaysia and Australia.

"OSK is pursuing licences in Australia to establish a new fund that will raise third-party capital, generating revenue from management fees.

"This fund initiative is planned once its loan portfolio in Australia reaches a sufficient scale, expected by the end of financial year 2025 (FY25) when it aims to have a sizable RM514 million (AU$166.9 million) portfolio.

"The Australian market offers significant opportunities due to the dominance of major banks and stricter capital regulations, creating a demand gap that OSK aims to capitalise on," it added.

HLIB Research said OSK's property segment anticipates a record-high launch of RM1.75 billion for financial year 2024 (FY24), marking its strongest performance in recent years.

"The higher launches were partly due to several delayed projects from the previous year. In  the first quarter of 2024 (1Q24), sales were slower at RM128 million, making up only 12.8 per cent of the full-year target.

"Nonetheless, sales are expected to pick up with more new launches ahead," it added.

Meanwhile, in the cables segment, growth is expected in the second half of 2024 (2H24) driven by rising demand from data centres and utility firms.

HLIB Research maintains its 'Buy' call on the company, with a higher target price of RM2.37 from RM2.21.

"The stock is poised for further re-rating given its exposure to key growth areas, yet valuation remains undemanding," it said.

Most Popular
Related Article
Says Stories