HLIB Research said the company's management has turned more upbeat on its near-term earnings prospects.
PETALING JAYA: There is renewed optimism for Hiap Teck Venture Bhd
, buoyed by signs of recovery in the steel industry and improving demand drivers in the construction sector.
Hong Leong Investment Bank (HLIB) Research has maintained a “buy” call with a higher target price of 36 sen, citing stronger earnings visibility and an attractive valuation base.
The company’s outlook is underpinned by stabilising steel prices and the ramp-up of its associate Eastern Steel Sdn Bhd (ESSB).
“Management has turned more upbeat on its near-term earnings prospects, underpinned by better near-term steel price outlook, following the China’s recent announcement of a new steel industry action plan,” HLIB Research noted in its report to clients yesterday.
Hiap Teck’s core net profit for the financial year ended July 2025 (FY25) rose 11% to RM101.8mil, largely thanks to stronger contributions from ESSB.
The associate’s earnings surged 81% year-on-year to RM126.7mil, driven by higher output from its new blast furnace, the commencement of hot-rolled coil (HRC) production, and lower production costs.
ESSB’s HRC plant has reached about 70% utilisation, with management targeting 90% by end-2025.
While trading and downstream operations remained subdued due to the transitionary impact of the extended sales and service tax, Hiap Teck’s management expected a recovery from early 2026.
“The subdued sales volume at its trading and downstream segments is expected to recover, supported by the rollout of several infrastructure projects including the Northern Perak water supply scheme,” HLIB Research pointed out in its report.
