UOB KAY HIAN RESEARCH (JUNE 30): Eco World Development Group Bhd (KL:ECOWLD) posted in-line earnings for the second quarter ended April 30. We maintain our FY25 sales forecast of RM4.2 billion, underpinned by new launches from “duduk” apartments (Terra @ Eco Ardence, Sa Young 3 @ Eco Botanic 2), industrial sales and ongoing projects. As at end-May, the remaining industrial landbank rose to 1,594 acres (35% of total), with RM6.2 billion in gross development value (11% of total). Management continues to see solid demand for ready-built factories and smaller plots from local manufacturers, and larger plots from global industrialists. Looking ahead, FY26 sales will be supported by three major launches: Eco Business Park 7 (EBP7) by end-2025, Eco Radiance and Eco Botanic 3 (both by 1Q2026).

Net gearing ratio is expected to remain elevated in the near term (versus 0.55 times as at end-April), pending the completion of the EBP7 and Kuala Langat land acquisitions, funding requirements for working capital and three new developments, as well as equity funding for its build-to-lease joint venture. Despite the higher gearing, management remains committed to maintaining stable dividend payouts, supported by strong cash generation from 16 to 18 mature projects and remaining land sales proceeds of about RM1.3 billion.

We revise our earnings forecasts by -4%/+3% for FY25/FY26 respectively to factor in the reclassification loss of Eco World International and gain from Paragon Pinnacle stake acquisitions, alongside a higher gearing ratio, and lifted FY27 forecast by 21%, mainly to include the recurring income from data centre (DC) build-to-lease and inclusion of EBP7 revenue contribution.

We maintain our “buy” call and raise our target price to RM2.39 from RM2.37 previously. Our revised valuation reflects the removal of the 27% associate stake in Eco World International following its strategic decoupling and the inclusion of an 80% stake in the JV build-to-lease DC, valued at RM713 million.

Our target price is based on a 35% discount to the revised net asset value of RM3.67, factoring in an enlarged share base assuming full conversion of remaining warrants. This implies an FY26 P/B of 1.4 times (10-year average: 0.7 times) and FY26 PER of 16.2 times (five-year average: 10.9 times), which is considered fair given a CAGR of 17% from FY25 to FY27 and a structural lift in earnings quality from the inclusion of recurring DC rental income.

Target price: RM5.33 BUY

PHILLIP CAPITAL (JUNE 30): Gamuda Bhd’s (KL:GAMUDA) results for the nine months ended April 30 came in below expectations, forming 65% of our and 63% of consensus full-year FY25 forecasts. The earnings miss was attributed to slower-than-expected Penang LRT progress recognition and weaker property sales. Gamuda’s outstanding construction order book stands at RM34.6 billion, with year-to-date contract wins of RM15.8 billion, well on track to meet its RM40 billion to RM45 billion order book guidance. Based on the projected monthly revenue burn rate, the group would need to secure an additional RM11 billion worth of new jobs in 2H2025.

Gamuda is actively bidding for RM24 billion worth of projects it considers to have a high success rate probability, including RM5 billion in data centre (DC) works, RM4 billion Sabah water treatment plant, RM3 billion in additional Penang LRT works and RM3 billion for Taiwan MRT. The company is bidding for six to seven DC projects, of which four to five are from Pearl Computing, with contracts expected to begin rolling out from 3Q2025.

We trim our FY25 to FY27 earnings by 5% to 7% to account for slower-than-expected recognition for the Penang LRT project and a more conservative outlook on property sales. Post-earnings cut, we lower our target price from RM5.41 and maintain our “buy” call.

Target price: 37 sen BUY

HONG LEONG INVESTMENT BANK RESEARCH (JUNE 30): Hiap Teck Venture Bhd’s (KL:HIAPTEK) core net profit for the nine months ended April 30 of RM48.5 million (-41%) fell short of our expectations, accounting for only 46.6% of our full-year estimate, with key variances stemming mainly from weaker-than-expected steel prices and compressed margins in both trading and downstream segments. We cut our FY25/FY26/FY27 core net profit forecasts by 33.5%/17.0%/12.6%, mainly to account for lower sales volume and margin assumptions in both trading and downstream segments.

Management has turned more cautious over its near-term prospects as challenges in the steel sector are expected to persist. This cautious stance is mainly driven by weak demand sentiment in China — the bellwether of the global steel industry — further exacerbated by US President Donald Trump’s recent decision to double US steel import tariffs to 50%. Nevertheless, the weak near-term industry prospects will likely be partly cushioned by strong performance of its scaffolding business and improving economies of scale at Eastern Steel Sdn Bhd. We maintain our “buy” call and lower our target price by five sen to 37 sen, based on seven times revised FY26 core EPS of 5.3 sen (indicating an FY25 P/B of 0.45 times).

Target price: RM6 OUTPERFORM

KENANGA INVESTMENT BANK RESEARCH (JUNE 30): United Malacca Bhd (KL:UMCCA) ended FY25 (ended April 30) very well, with core net profit up 93% year on year, exceeding our and consensus estimates by 14% and 9% respectively. Due to softer palm oil prices, we maintain a weaker FY26 core cash EPS (CEPS) of 51 sen and introduce a slightly firmer FY27 CEPS of 52.8 sen on better Indonesian earnings. The company declared a final dividend of seven sen, along with a special dividend of six sen to bring cumulative FY25 DPS to 18 sen, better than our forecast of 12 sen.

Crude palm oil prices have eased since the recent peak in November 2024 but global supply deficit looks set in 2025 with supply tightness likely to persist into 2026, hence CPO prices are likely to stay firm with an average price of RM4,000 per tonne expected for United Malacca in FY26/FY27.

We maintain our target price, based on 0.9 times price over net tangible assets (NTA), in line with the historical range for smaller to mid-sized planters. The 10% discount to NTA is to reflect its historically weak return on equity. We maintain our “outperform” call as we see deep value at current levels.

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