KUALA LUMPUR (Aug 12): Analysts say DRB-Hicom Bhd’s (KL:DRBHCOM) purchase of Spirit AeroSystems’ Malaysian unit could boost its aerospace arm Composites Technology Research Malaysia Sdn Bhd (CTRM), especially with Malaysia Airlines ordering around 60 Boeing planes. However, it may not be enough to turn around DRB-Hicom’s overall performance, which posted an RM23 million net profit on RM16.2 billion revenue for the financial year ended Dec 31, 2024.
DRB-Hicom on Monday said it is buying Spirit Malaysia for RM426.1 million. Based in Subang, Spirit Malaysia makes key parts for Airbus and Boeing aircraft. In 2024, it posted over RM1 billion in revenue and RM70.1 million in profit. DRB’s CTRM unit also makes composite parts like wings and nacelles for similar aircraft.
Hong Leong Investment Bank (HLIB) sees the deal adding about RM45 million annually in profit, strengthening DRB’s financials and complementing CTRM’s operations. It maintains a “hold” rating on the stock due to challenges in DRB’s main car business and weak performance from Pos Malaysia Bhd (KL:POS) and DRB-Hicom Defence Technologies Sdn Bhd.
Kenanga Research, which expects the stock to underperform, warned that Spirit Malaysia’s earnings may become volatile after losing its guaranteed “cost-plus” profit model post-takeover. Based on its calculation, the acquisition will enhance DRB-Hicom’s FY2026 forecast earnings by 22% with a slight increase in net gearing from 0.98 times to a still manageable 1.02 times.
It also cites concerns over DRB-Hicom’s weak auto, banking, postal and property segments as a drag on the group's earnings.
PublicInvest Research, which has a “neutral” view on the stock, believes the deal will make CTRM more competitive, potentially increasing DRB’s FY2026-27 earnings by 16%, even after considering higher debt costs.
All three research firms are waiting for the deal, which is conditional on regulatory approvals — including from the European Commission and US Federal Trade Commission — to go through before updating their forecasts.
The stock closed the day up 0.61% to 82 sen a share, giving it a market capitalisation of RM1.59 billion.