Central Global Bhd - Subdued Performance YTD; Eyes on Stronger Finish in 6QFY25
Wed, 28-May-2025 06:27 am
by Research Team • Apex Research

Counter

CGB (8052)

Target Price (RM)

1.000

Recommendation

Buy

  • CGB’s 5QFY25 CNP surged 6,610% yoy and 270% qoq to RM3.9m, bringing 15MFY25 CNP to RM5.4m, accounting for only 54% of our estimates, missing expectations. Shortfall was due to lower-than-expected revenue recognition in the construction segment from 1QFY25 to 3QFY25.

  • Earnings sustainability will be supported by outstanding orderbook amounting to RM625.2m (3.3x against trailing-12-months construction revenue) that will provide earnings visibility until CY28, while offsetting the challenges faced in the manufacturing segment.

  • Maintain BUY recommendation with an unchanged TP of RM1.00, based on SOP valuations and ascribed with three-star ESG rating.

 

Results missed expectations. CGB’s 5QFY25 CNP came in at RM3.9m, bringing 15MFY25 CNP to RM5.4m, accounting for only 54% of our estimates, missing expectations. The shortfall was mainly due to weaker performance from 1QFY25 to 3QFY25, driven by slower work progress in the construction segment. 

 

YoY. 5QFY25 CNP surged 6,610.3% yoy, driven by higher work progress alongside cost rationalisation and containment efforts within the construction segment. Revenue for the quarter improved +170.5% yoy.

 

QoQ. Core net profit surged 270% qoq, primarily due to accelerated works on the Bekalan Air Luar Bandar Project and work commencement on Pan Borneo Highway Project in the construction segment. Revenue for the quarter improved +79.3% qoq.

 

Outlook. While results fell short of expectations, CGB demonstrated resilience with a strong recovery in core earnings (+6,610.3% yoy, +270% qoq). We anticipate further improvement in 6QFY25 and into FY26F, supported by higher billings from the construction segment. The Group’s unbilled orderbook currently stands at RM625.2m — 3.3x its trailing 12-month construction revenue — providing earnings visibility through to CY28. Manufacturing wise, we expect the segment to remain in the red as the Group’s new masking tape plant is still undergoing trial runs. To meet growing demand and enhance operational efficiency, the new facility is projected to raise production capacity to 39.0m m² by end of CY25 and 50.0m m² by end of CY26, barring unforeseen delays.

 

Earnings Revision. We have revised our project progress assumptions to reflect slower revenue recognition in FY25F. As a result, FY25F earnings forecast was lowered by 27.5%. Our orderbook assumptions for FY26F and FY27F remain unchanged at RM600m respectively, supported by a positive outlook for the construction sector. 

 

Valuation. We maintain our BUY recommendation on CGB, with an unchanged TP of RM1.00 based on SOP valuations with the manufacturing segment EPS of 0.7 sen in FY26F pegged to P/E multiple of 18.0x, while the construction segment’s FY26F EPS of 2.9 sen is pegged to P/E multiple of 29.8x and ascribed with three-star ESG rating.

 

Risk. Geopolitical tensions, labour shortages, insufficient industrial land, and unexpected further rise in construction cost.

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.212042 4.248408
EUR 4.921000 4.929487
CNY 0.591903 0.592919
HKD 0.540309 0.544492
SGD 3.268153 3.293573