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GCB 2H26 Outlook - TP RM2.00
RHB research expect a similar strong performance into the coming year,
as management has taken a proactive inventory positioning and an effective
hedging strategy, coupled with healthy combined ratios from the forward
sales back in 2025. Grinding utilisation rate will remain at 80-90% as demand
is set to improve progressively on restocking activities and a potential super
strong El Niño which may further disrupt bean supply – reverting to a market
deficit from the current forecast of a market surplus. FY26 cover ratio is
estimated at c.80%.
• Earnings and TP. Following the 1H26 beat, we raise FY26F-28F earnings by
89%, 7%, and 7% to reflect stronger EBITDA margins, reduced financing
expenses, and a 7 sen DPS for FY26. Our TP is lifted to MYR2 (from MYR1.70)
as we roll forward our valuation base year to FY27, pegged to an unchanged
12x FY26F P/E (c.5-year average). Key risks: Sharp raw material price
fluctuations, weakening demand, and execution and country risks.
Over the last 3 years on average, earnings per share has increased by 71% per year but the company’s share price has only increased by 40% per year, which means it is significantly lagging earnings growth.
I agree w/ u for the most part. Lets see hw the price moves n/wk?! I hv a feeling if theres sellers offloading n/wk & absorbed by mngmnt.. i dont think the price will retract significantly?
Pesona will def price better next yr - I play long.
One water treatment plant is slated for completion this year; water supply revenue should see growth early next year .
Long-term beneficiary of rising data center (DC) water consumption, though short-term catalysts over the next 1–2 quarters remain limited. Given the recent rapid run-up, taking some partial profits off the table is sensible.
RM49 mil Federal Grant: Disbursed for pipe leakage repairs (Non-Revenue Water reduction) < non-recurring/ad-hoc, but recurring periodically over time.
RM51 mil State Cost Reimbursement: Compensation for exploring alternative water sources during past Johor supply crunches < also an ad-hoc reimbursement.
Electricity accounts for 65% of operational costs. A 5% increase in electricity tariffs could hit net profit by roughly 30% < exercise caution if TNB revises industrial tariffs .
Ranhill Headline Performance:
Revenue: RM657 mil (vs. RM613 mil in previous quarter) .
Net Profit: RM70 mil (vs. RM58 mil in previous quarter) .
Key Highlights:
Lifted by two one-off income items this quarter: (i) RM49 mil federal government grant; (ii) RM51 mil state government cost reimbursement (details below) .
Stripping out these items, the core water operations softened < exact magnitude is unclear due to limited disclosure
