PETALING JAYA: Hong Leong Investment Bank (HLIB) Research remains positive on OSK Holdings Bhd
’s prospects, underpinned by its fast-growing private credit and cables segments, which are driving earnings and diversifying the group’s income base beyond property.
OSK had announced the acquisition of Wilayah Credit, a motorcycle financing company, which currently has a loan portfolio of about RM40mil. Post-acquisition, OSK can unlock growth by leveraging on its stronger funding capacity.
HLIB Research said the acquisition also offers risk diversification benefits by reducing reliance on a single segment in consumer financing, allowing the group to build a more balanced and robust financing portfolio.
“We believe investors continue to undervalue the group’s private credit segment.
“For perspective, Qualitas Ltd, which is a listed Australian firm specialising in private credit investments in real estate, is expected to deliver a financial year 2024 (FY24) to FY27 compounded annual growth rate (CAGR) of 25.1% and currently trades at 23.9 times FY26 price earnings ratio, based on consensus estimates.
“Similar to Qualitas, OSK also has private credit exposure in Australia primarily in the real estate segment that makes up 28% of the loan portfolio. In fact, compared wth Qualitas, OSK’s loan portfolio has a more balanced and diversified mix both geographically and across customer segments, giving it the advantage of risk diversification,” the research house added.
OSK’s private credit segment demonstrated a strong track record, delivering a robust six-year pre-tax profit CAGR of 25.1% from FY18 o FY24, which is on par with Qualitas expected growth rate.
“Having grown to a meaningful scale, the segment is well positioned to gain increasing investor visibility as it emerges as a key earnings driver for the group moving forward,” HLIB Research noted.
The cables segment is expected to post strong earnings in the second quarter of 2025, supported by the completion of major deliveries to a utility company.
