Kenanga Research said it is cautious on DRB-Hicom for its inability to capitalise its position as the second-largest player in the local automotive sector.
PETALING JAYA: DRB-Hicom Bhd
’s earnings outlook remains cautious, as it continues to face challenges across its automotive, banking, postal and properties business segments.
Kenanga Research said DRB-Hicom’s results for the first nine months of the financial year 2025 (9M25) were deemed within its expectation despite core net profit plunging 49% year-on-year (y-o-y) as seasonally the fourth quarter (4Q) is typically the strongest quarter, on year-end sales promotions.
The group’s 9M25 core net profit (excluding one-offs at RM5mil) came in at 46% of its full-year forecast and 48% of the consensus full-year estimate.
On a y-o-y basis, the group’s 9M25 revenue rose 4% driven firstly by stronger automotive sales, underpinned by an improved sales mix despite weak sales volume from Proton at 110,153 units (0%), Mitsubishi at 10,251 units (14% decline), and Isuzu at 9,625 units (1% fall) due to intense competition in the mid-market segments.
Moreover, DRB-Hicom’s 9M25 revenue was also supported by higher financing income from Bank Muamalat (4% rise).
The group’s postal service expanded by 1% y-o-y with the increase in in-flight catering business and parcel volume bucking the trend, driven by service-led market share gains in both the business-to-business and business-to-consumer sectors.
“However, despite lower effective tax rate at 24.8% versus 42.6% in 9M24, its core net profit plunged 49% as its 3Q25 results fell into losses,” Kenanga Research said in a report yesterday.
The aerospace and defence segment plunged into losses of RM20mil due to slower renewal of defence contracts which more than offset the profit from the aerospace business, and tax expense of RM45mil compare to tax refund of RM4mil in 2Q25.
Kenanga Research said it is cautious on DRB-Hicom for its inability to capitalise its position as the second-largest player in the local automotive sector, second only to Perusahaan Otomobil Kedua Sdn Bhd or Perodua, with a market share of about 30%.
The research house also noted on the reduced profit for its banking franchise under Bank Muamalat, and uncertain outlook for its postal and properties segments with continuous losses.
“We are monitoring the recent proposal to set a floor price for courier services to ensure healthy competition in the sector which is expected to improve its postal segment business condition,” Kenanga Research said.
It added that with rising competition in the automotive segment, especially within the current mid-market segment of Proton and uncertain outlook for its other segments, it maintained its “underperform” call on DRB-Hicom.
Hong Leong Investment Bank (HLIB) Research said it remains cautious on Malaysia’s automotive market environment, given continuous stiff market competition, while Pos Malaysia Bhd and Deftech remained drags to the group.
Nevertheless, HLIB Research said it expects the group to stay supported by the performance sustainability of Bank Muamalat and Composites Technology Research Malaysia Sdn Bhd.
HLIB Research downgraded its call on DRB-Hicom to a “sell” (from “hold”) but with a higher target price of RM1.08 (from 85 sen).
